Google stock sinks with $24bn market value loss
19 October 2012
Google’s shares crashed by nine percent on October 18, after the tech giant published its third quarter results prematurely and exposed a 20% shortfall in its profits.
Google suffered the single largest plunge in stock market history when approximately $26bn was wiped off the company's value after its results were accidentally released.
Trading in Google stock was halted for over two hours when its shares fell by nine percent in just eight minutes following the release of its disappointing Q3 earnings report.
Google issued a statement shortly after the leak, saying that its financial printer RR Donelly had filed an early draft of the company's results without authorisation. "We have ceased trading on Nasdaq while we work to finalise the document. Once it's finalised, we will release our earnings, resume trading on Nasdaq and hold our earnings call as normal," the statement said.
The poor performance by Google can be attributed to its $12.5bn acquisition of Motorola Mobility, the hardware devices division of the struggling cellphone manufacturer. Another problem for the company, which is overwhelmingly reliant on search-based advertising for its revenue, is that advertisers have slashed payments to the search giant as consumers turn towards mobile devices.
Google reported consolidated revenues of $14.1bn for the quarter ended September, 2012, an increase of 45% compared to the third quarter of 2011. Google revenues were $11.5bn, representing a 19% increase over third quarter 2011. Google-owned sites generated revenues of $7.73bn, representing a 15% increase over third quarter 2011. Google’s partner sites generated revenues of $3.1bn, representing a 21% increase from third quarter 2011.
Google's troubles coincide with the steady fall in Facebook's share price and the ongoing stock market struggles of tech start-ups including Groupon and Zynga. Last month, Facebook founder Mark Zuckerberg acknowledged that the social network’s stock market debut damaged its image.
Devina Joshi, London