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Alphabet Stock Remained Stable in February

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Dec. 4 2020, Updated 3:52 p.m. ET

Alphabet stock price performance

Alphabet stock (GOOGL) was almost flat in February but surged 11.9% on a year-to-date basis as of March 4. The stock rose 1.37% on Tuesday and closed at $1,169.19. Alphabet reported its fourth-quarter 2018 results on February 4, wherein the Google parent delivered better-than-expected earnings as well as revenues. The company is consistently focusing on delivering higher revenues, backed by rising advertising sales growth. However, the declining cost-per-click trend and a surge in expenses are weighing on the operating margins.

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Advertising revenues

Alphabet derives a significant portion of its overall revenues from its advertising business. Advertising revenue grew ~20% YoY in the fourth quarter, higher than the 12.6% ad revenues growth in the preceding quarter. However, the company is also facing pressure from eroding advertising prices.

Alphabet’s peer Facebook (FB) generated ad revenues of $16.6 billion, up 30% YoY in the fourth quarter. Facebook’s ad business contributed more than 98% to Facebook’s revenues in the fourth quarter. Social media companies Snap (SNAP), Yelp (YELP), and Twitter (TWTR) also generate most of their revenues from advertising.

However, Google, Alphabet’s biggest division, is struggling in the digital advertising business amid increasing competition from rivals Facebook and Amazon (AMZN). Amazon has reached the third spot in the digital advertising industry in the US.

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