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Google’s Advertising Revenue to Drop 5.3% as Coronavirus Bites

Google LLC, an American multinational technology company that specializes in internet-related services and products, is likely to post an advertising revenue drop of 5.3% as the impact of the coronavirus pandemic hits businesses and ad expenditures worldwide, according to eMarketer.

That fall for the world’s largest online advertising company is largely due to their heavy dependence on international tourism and travel advertisement on Google search, which has been affected by the COVID-19 pandemic. If eMarketer’s forecasts were realized, Google will post its first decline since the global financial crisis of 2008.

All industries have been affected by the coronavirus pandemic worldwide, pushing firms to cut their advertising expenditure as travel restrictions worsened demand.

According to eMarketer, Google’s U.S. ad revenue could have grown by nearly 13% without the recent pandemic. The research firm expects that Google’s competitors will also feel the heat. Facebook Inc, an American social media conglomerate based in Menlo Park, California, is forecast to grow its U.S. advertising revenue by about 5%, way less than 2019’s growth of over 25%.

Problems are not over yet

Over 1,600 employees at Alphabet Inc, the parent company of Google, are petitioning to stop providing Gmail and other services to police departments, a source familiar with the matter told Reuters.

The workers in a petition seen by Reuters expressed disappointment with Google for not joining the “millions who want to defang and defund” police departments. Protests have erupted in the U.S. and around the world over the killing of George Floyd, who died after a police officer knelt on his neck for minutes in Minneapolis last month.

“We should not be in the business of profiting from racist policing,” the Google petition has seen by Reuters noted.

Google stock outlook

Thirty-four analysts forecast the average price in 12 months at $1,493.03 with a high of $1,800.00 and a low of $1,237.00. The average price target represents a 2.92% increase from the last price of $1,450.66, according to Tipranks.

It is good to buy at the current level as all major technical indicators, including 20-day Moving Average and 100-200-day MACD Oscillator signals a buying opportunity. BofA global research raises price objective to $1,610 from $1,420 and Citigroup raises price target to $1600 from $1400.

Citigroup analysts in its May research report noted that “We now model 5% year-on-year growth in 2020, with full-year revenue reaching $169.6 billion, and we expect 20% year-on-year rebound in 2021, with full-year revenue reaching $203.4 billion.”

The bank further cut Alphabet Inc’s revenue estimates for the Q2 2020 to reflect the impact of the health crisis, which has hurt advertising revenues.