YouTube Parent Alphabet's Stock Falls As Concerns Over Ad Spending Pulls Weigh
Shares of YouTube and Google parent Alphabet Inc. fell 0.3% toward a six-week low in morning trade Monday, amid growing concerns over the potential negative impact of the growing number of customers pulling ads from the video streaming service. Instinet analyst Anthony DiClemente cut his stock price target to $925 from $950, saying the ad pulls could lower revenue by about $750 million, while the cost of developing a solution could weigh on profit margins. "Checks with ad buyers highlight that when concerns over brand safety arise, approach is to 'pull spend, ask questions later,'" DiClemente wrote in a note to clients. J.P. Morgan analyst Doug Anmuth didn't making any ratings changes, given that the financial impact of add pulls to be "modest," but he did say that "the potential impact to Google has moved beyond just headline risk." The ad pulls started with a few advertisers in the U.K., but has since expanded to large global companies, with AT&T Inc. saying last week that it was suspending all of its ad spend on Google's YouTube after some of its ads ran alongside controversial videos, including those supporting terrorism. Google's stock has gained 5.1% year to date, while the SPDR Technology Select Sector ETF has climbed 8.7% and the S&P 500 has tacked on 4%.
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