Alphabet just had its worst day as a public company. BofA now values Google search at a lower multiple than fossil fuel stocks
Source: Fortune ·
Search revenue missed forecasts and free cash flow went negative. Bank of America now values Google’s core search business at about 10 times earnings, against 18.7 for the S&P 500.
From the source
Google search, the business that paid for two decades of Alphabet’s ambitions, is now valued at about 10 times earnings, by Bank of America’s count. The S&P 500 trades at 18.7x forward earnings, according to FactSet. Energy, the market’s cheapest sector, trades at 13x. That math pummeled the stock Thursday. Alphabet’s Class A shares fell 12.6% to $283.82, their worst day since they began trading in 2004. The decline wiped out about $482 billion in market value. Previously, Alphabet’s worst day was in March 2020 when the stock dropped 11.6%. The trigger was the search business—the same juggernaut that turned Google into a verb. Search and other revenue grew 12% in the third quarter to $63.35 billion. Analysts expected 15%. That miss on growth momentum compares to 17% growth in the second quarter and 19% in the first. Meanwhile, Google Cloud’s revenue more than doubled, up 103% to $30.71 billion. But Alphabet spent $51.4 billion on capital expenditures in the quarter, more than double…