Crypto Whales Are Loading Up — Are You?
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UBS: Sorting Reality From Noise
UBS's Eric Sheridan explored in a research report on Monday just how much of the controversy is legitimate concern and what is "noise."
Sheridan highlighted the fact that the YouTube ad scandal coincided with London AdWeek. Coincidence or not, Facebook Inc (NASDAQ:FB)'s scandal in which it inflated metrics was also brought into the spotlight near the NYC AdWeek event last fall.
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In both cases, the ad scandal came at a time when advertisers and ad agencies were looking for any sort of negotiating leverage. Meanwhile, several brands that have already pulled ads on YouTube, including Verizon Communications Inc. (NYSE:VZ) and AT&T Inc. (NYSE:T) may have their own "alternative motives with respect to their own digital ad properties."
Temporary Impact
According to Sheridan, the YouTube ad scandal hasn't exploded to the point where it will cause any change to his long-term estimates. Nevertheless, he remains "vigilant" as YouTube is one of the two main ad revenue drivers — the other being mobile search.
Also, the analyst pointed out that YouTube is actually a drag on the company's gross–gross profit given the revenue split agreement. While it is not an ideal situation for YouTube's revenue to fall, it could actually result in better profit metrics for the parent company.
Finally, Sheridan argued that investors continue to underestimate Alphabet's other growth drivers, including Google Play, Google Maps, Enterprise/cloud and the device ecosystem.
Shares remain Buy rated with an unchanged $980 price target.
Related Links:
Why Google's YouTube Ad Controversy Is More Serious Than Facebook's Mis-Measured MetricsHere's Every Major Corporation That's Pulled Ads From YouTubeCrypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.