Google’s market capitalization, or the total values of its shared, soared 16% in one day of trading, adding $65 billion in share value for the online search and advertising giant. Its soaring share price, while hitting record highs for Google itself, also lifted the NASDAQ index to new heights.
The increasing stock price has made the company the second largest U.S. company in terms of market cap, behind Apple. It now stands valued at a total of $468 billion. Apple is valued at $740.3 billion.
The company reported revenue of $17.7 billion for the quarter, up 11% over the same time period last year. It also reported GAAP operating income of $4.8 billion, and earnings per share (EPS) of $6.43 per share for Class C stock, which were all higher than expected numbers.
But in addition to the numbers, there were a few other reasons why Google’s stock price jumped as well.
- Youtube growth: Google said that watch time on Youtube increased 60% in the second quarter, and that the online video service has more viewers in the highly desired 18-49 year old range than any U.S. cable network. That’s quite an astonishing feat, and it may help Youtube increase advertising revenue in years to come.
- Mobile growth: Even though the cost-per-click continued to fall, as it has in several quarters, aggregate paid clicks were up 18%, mostly as a result of increase in mobile traffic and searches from smartphones. Google recently tightened rules around mobile-friendly websites, and that might also help with clickthrough on mobile ads.
- Tighter rein on spending: Google’s new CFO, Ruth Porat, comes from Morgan Stanley, and has sent messages that the free-spending days of Google may be over. The company reportedly added less headcount this quarter than it did in previous quarters, and has tightening other spending. It remains to be seen whether the company will continue to spend on “moonshot” projects such as Google Glass and self-driving cars.
Many tech firms reported positive results this past week. Both Netflix and Intel reported better-than-expected revenue and profits, and Apple is rumored to report strong earnings next week as well.