In the first quarter of this year, Google’s revenue was $68.01 billion, a 23% increase from last year, a slowdown from 34% growth during the first quarter of 2021, when the economy was recovering from the COVID-19 pandemic.
Analysts had expected YouTube’s ad revenue to exceed expectations for the quarter when users were mostly at home on their devices, the video site benefited particularly from the pandemic. The missed opportunity comes as TikTok captures an increasing share of the social media video market.
Investors reduced their exposure, as the stock of Alphabet, the parent company of Google went down 18% for the year as of Tuesday’s close. Alphabet shares fell after hours to their lowest since May 2021.
Ruth Porat, CFO of YouTube, said on the analyst conference call that direct response ads experienced ‘modest growth’. “The deceleration is largely a result of the strong first quarter of 2021,” she said.