After the closing bell on Monday, Google-parent Alphabet (GOOGL - Free Report) reported mixed first-quarter 2019 results, with earnings topping and revenues missing estimates. The company saw strength in mobile search, YouTube, and Cloud in the quarter. However, due to the mixed results, shares of GOOGL lost as much as 7.72% in aftermarket hours. The decline can be explained by the slowdown in ad revenue growth. Moreover, the company bore a $1.7-billion fine by the European Commission in the quarter.
Earnings at a Glance
Earnings per share were $11.90, trumping the Zacks Consensus Estimate of $10.57 and improving from the year-ago $9.93. Net revenues, excluding total traffic acquisition cost or TAC (TAC is the portion of revenues shared with Google’s partners, and amount paid to distribution partners and others who direct traffic to the Google website) of $6.86 billion, came in at $29.48 billion, up 18.4% year over year. However, net revenues missed the Zacks Consensus Estimate of $29.99 billion.
Advertising revenues grew 15.3% year over year to $30.72 billion and accounted for 84.5% of total revenues. Paid clicks on Google's own sites and apps jumped 39% year over year while cost-per-click dropped 19% from the year-ago quarter.
Traffic acquisition costs were up 9.1% from the year-ago quarter.
ETFs in Focus
The mixed results could have a huge impact on ETFs that are heavily invested in this Internet giant. Below we highlighted five ETFs with double-digit exposure to Alphabet that could see some losses in today’s trading session (see: all the Technology ETFs here).
Vanguard Communication Services ETF (VOX - Free Report)
This fund also targets the communication sector by tracking the MSCI US Investable Market Communication Services 25/50 Index. Holding 107 stocks in its basket, Alphabet takes the top spot with 23.5% share. VOX has AUM of $2 billion and charges 10 bps in annual fees. The fund has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook (read: ETFs to Soar After Facebook's Solid Q1 Results).
Fidelity MSCI Communication Services Index ETF (FCOM - Free Report)
This fund follows the MSCI USA IMI Communication Services 25/50 Index. It holds 106 stocks in its basket, with Alphabet occupying the third position at 11.45%. The product has amassed $352.1 million in its asset base and charges 8 bps in annual fees. It has a Zacks ETF Rank #1 with a Medium risk outlook (read: Hedge Fund's Buy Dip in Tech Stocks: Follow Them With ETFs?).
Communication Services Select Sector SPDR Fund (XLC - Free Report)
This ETF tracks the communication services sector of the S&P 500 Index and has accumulated $5.88 billion in its asset base. It follows the Communication Services Select Sector Index and holds 26 stocks in its basket, with Alphabet Inc. Class A occupying third position with 11.8% weight. The product charges 13 bps in annual fees. It has a Zacks ETF Rank #1 (read: U.S. Stocks Near Record High: Top-Ranked ETFs to Buy).
iShares Global Comm Services ETF (IXP - Free Report)
This ETF provides global exposure to companies in media, entertainment, social media, search engine, video/gaming and telecommunication services by tracking the S&P Global 1200 Communication Services Sector Index. It holds 67 stocks in its basket with GOOGL taking the third spot at 10.2% share. The fund has amassed $257.5 million in its asset base. Expense ratio came in at 0.47%. IXP has a Zacks ETF Rank #1 with a Medium risk outlook.
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