On Tuesday morning, Google’s CFO George Reyes, suggested the extraordinary revenue growth Google has seen over the past three years might slow. He didn’t say stop, or even drop precipitously; he said the word, slow.
“Clearly our growth rates are slowing. We see that each and every quarter,” he told an investor conference in New York. “We are going to have to find new ways to monetize the business.”
That admission was enough to spark a frenzied sell off of stocks that saw about 13% of company shares trade hands and reduced the overall average value of global major stock indexes by about 1%. Early Tuesday, Google was trading below $350 per share.
By the end of the day, Google took the initiative and issued a statement “clarifying” what Reyes was really trying to say.
“As we have stated before, monetization improvements will continue to be a key factor in driving future revenue growth,”Google said in its statement. “We still see significant opportunities to improve monetization and intend to continue to focus our efforts in this area. Moreover, as we have stated in our SEC filings, our revenue growth rate has generally declined over time, and we expect that it will continue to do so as a result of the difficulty of maintaining growth rates on a percentage basis as our revenues increase to higher levels.”
In other words, Google is still making scads of money, as expressed purely by the numbers (which tend to number in the billions). Each quarter, they make a good deal more than they made in the previous quarter, when measured dollar for dollar. When analysts measure growth as a percentage of previous quarters, and then examine those percentages against each other, revenue growth appears to be slowing.
Realizing the good sense in the statement, investors clearly felt more comfortable with the tech market, pushing Google’s share prices $2.18 higher by the close of today’s trading, ending the day at $364.80.