Yesterday, Googled delivered another impressive quarter. Non-GAAP EPS rose from $6.76 a year ago to $8.08, a 19.5% year-over-year growth. I won't go into the earnings report too much, but investors didn't like 2 things. First, it missed Wall Street's average estimate of $8.10/share by 2 cents (or 0.25%), and second, more importantly, costs have risen more quickly than revenue has.
In my opinion, those who are dumping the stock have missed the point. If the costs had eroded earnings so much that earnings had dropped instead of rising 19.5%, I would have hammered the stock too. The street has gotten used to Google blowing away estimates that anything less is now not enough. It's a little weird, because if the street is expecting Google to crush estimates, then there's something wrong with the estimates themselves, no?
In any case, I'm getting my cash ready. I'm going to wait a couple of days until the dust settles. If the stock quickly bounces back to its pre-earnings level, so be it, I've missed my opportunity. However, I do foresee some downward pressure in the upcoming days.
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