Google shares have reached an all-time high on Friday by adding $60 billion to its market value. The tech giant’s shares closed at 16.26% up while investors cheered on the profit figures. The rise has taken Google’s market size to well above $400 billion (£256 billion) making it second only to Apple that is valued at $745 billion. This means that the co-founders of Google Larry Page and Sergey Brin have each made a paper profit of approximately $4 billion in one day.
After trading has closed on Thursday Google reported its second quarter net income of $3.93 billion in three months ending June. There is a very significant increase in net income compared to $3.35 billion for the quarter a year earlier. These results have ended the six consecutive quarters wherein the earnings of Google fell short of the analysts’ target.
Where did the growth in profit come from?
According to Finance Chief Ruth Porat, there was growth in mobile advertising and people were spending more time streaming videos on YouTube. YouTube has more than one billion users particularly from the age group 18 to 49 who watch videos on mobile phones. Their numbers are more compared to those who are watching cable television.
Advertisers pay Google if a user clicks on their ads. Cost per click or the average price of online ads fell during the quarter but it was offset by the increase in ad volumes. Google’s revenues from ads have been under pressure because as consumers access the site through mobile phones and tablet computers, the advertising rates tend to be lower.
According to a report from Reuters, at least 27 broking firms raised their price targets for Google shares with one predicting that that Google stock can rise as high as $800. As the market opened Friday, Google added an instant $50 billion as shares jumped. When the stock eventually closed, it was $97.84 higher at $699.62.
The rise has helped the tech-rich NASDAQ index where Google is listed to close at a record high for the second consecutive session on Friday, ending up more than 0.9%. Are the profit figures a Dawn of a New Era? Deutsche Banks said; it feels like it.