Google ( GOOGL ) released its second quarter earnings report after the bell yesterday, and share prices have climbed over 16%. Despite reporting an unadjusted EPS that fell short of the Zacks Consensus Estimate by 9%, the stock has gone on an unbelievable run (also read Google Q2 Earnings Missed, So Why Are Shares Soaring? ).
Several other factors, including an impressive adjusted EPS and new cost cutting measures, seem to be fueling the proverbial fire today. As one could expect, when a company as big as Google spikes like this, investors take notice. The social media world has been filled with opinions of GOOGL today, and we at Zacks have highlighted some of our favorite comments that help tell the story.
Bulls and Bears
StockTwits and Twitter read like a debate today, as investors couldn't seem to agree on whether or not Google could maintain this impressive performance. Many people are bullish on the stock, even pointing out new price targets that have started rolling in:
$GOOGL$GOOG price target raised to $780 from $670 at Deutsche Bank. MKM initiates with buy. Price target raised to $750 at Credit Suisse- Rachel Shasha (@Sassy_SPY) July 17, 2015
Other Bulls took a more humorous approach, even mocking the Google doubters:
$GOOGL Oh where oh where have the Bears gone, oh where oh where can they be?- Matthew Portillo (@Portillo) Jul. 17 at 09:20 AM
However, record high share prices just weren't appealing to some. While some were able to cash in over the past 24 hours, not everybody was convinced that the company was a good long term investment at this price:
$GOOGL People will regret buying up here. It's clearly going to drop.- L.B. (@SupaMario910) Jul. 17 at 10:23 AM
Taking a step back from the raw numbers, there is a bit of a human element involved with today's spike. Investors seem to be reacting very positively to Google's new CFO, Ruth Porat. Porat was brought on board in March, after serving as the CFO at Morgan Stanley for several years.
Porat was hired with a focus on reining in Google's spending. The company often damages their bottom line by spending a lot of cash on very expensive research and side projects. The challenge for the new CFO is to find a healthy balance between making investor-friendly spending decisions and maintaining the legacy of innovation that has made Google so expensive.
While Porat's short tenure at the company may mean that she hasn't really been able to make a lot of changes yet, it is the rhetoric that she has brought with her that is making investors happy. Her Wall Street background was on full display during the company's conference call yesterday as she discussed expense management. The social media world has taken note of the "Porat effect" and she really could be driving a lot of today's activity:
Refreshing to hear a woman's voice presenting Google's financial performance. Ruth Porat living up to billing so far. $GOOG$GOOGL- Jessica Guynn (@jguynn) July 16, 2015
Google's best investment in 2015: Mobile? No. YouTube. No! Hiring Ruth Porat in March, Yes! Market Cap. now at $474 billion and Rising!- Brian R. Bidwill (@biddybid07) July 17, 2015
At the end of the day, investors should be wary of some of Google's numbers. The company has now missed the Zacks Consensus Estimate in all of the last four quarters, and this has resulted in a downgrade to a Zacks Rank #4 (Sell). While this run has been great for investors who have been going long on Google or those able to foresee this jump a few days ago, nothing necessarily indicates that this will keep going forever. What is happening right now is very interesting, and if earnings estimate revisions start pouring in, we could see even further movement in the Zacks Rank. As of now, investors need to keep a close eye on everything surrounding Google, as this stock is certainly one to watch right now.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.