Google (GOOG:NASDAQ) shares pop in aftermarket after reporting strong fourth quarter earnings

Shares of Alphabet Inc., (GOOG:NASDAQ) the parent company of Google, popped in Tuesday’s extended trading after the tech behemoth reported strong corporate earnings for the fourth quarter. Google shares closed 1.73% ($2,753) higher in Tuesday’s trading session but shot 8% after the company reported earnings at the close of the market.

Alphabet reported revenue growth of 32%, proving again that it was able to withstand the pressures from the pandemic and inflation. Google reported earnings of $30.69, a blowout compared to $27.34 which Wall Street expected.

Revenue for the quarter came in at $75.33 billion surpassing the forecast of $72.17 billion. Revenue from YouTube advertising came in at $8.63 billion, less than $8.87 billion which analysts were expecting. Revenues from Google Cloud barely beat estimates when revenue from the segment came in at $5.54 billion vs $5.47 billion expected.

Alphabet also announced a 20-for-1 stock split in its Q4 2021 earnings report on Tuesday – for all 3 classes of its stock. The split will cover all three classes of Alphabet stock. Were the split to happen as of Tuesday’s close, Class A and Class C shares would trade at roughly $137 a piece, down from about $2,750 as of Tuesday’s close. Class B shares aren’t publicly traded.

The rosy results appear to be lifting sentiment, with shares of Meta (MVRS:NASDAQ) and Twitter (TWTR:NASDAQ) also higher after the bell. The split in shares would make the stock look cheaper, and appeal to retail investors who may see the stock as being too expensive.

The stock split could also clear the path for possible inclusion into the Dow Index which would further inflame positive sentiment towards the stock. Similar splits by Apple and Tesla were credited with helping extend a rally in share prices for those companies

Given that company executives tend to get more compensation from stock performance, this could be a well-calculated PR move on the part of the company to generate more interest in a stock that may believe is highly-priced, even with its strong fundamentals.

It may also be an image washing attempt by the company as it remains a subject of

Various antitrust filings. The biggest peril for Google comes from regulators in the U.S. and Europe who are filing lawsuits and proposing legislation to curtail its dominance. The tech titan faces separate antitrust lawsuits against its ad-tech, search, and app-store businesses, as well as state cases over claims it deceptively collected customers’ location information.

Google also faces proposed legislation that would limit tech companies’ ability to favor their own businesses, as well as a new bill being led by Sen. Mike Lee (R., Utah) that would force it to divest its ad-tech unit.

These challenges will saddle the company with legal fees. It also puts the company in freeze mode because it would discourage acquisitions that could draw regulators’ ire. At the extreme of the regulatory pressure from Washington, Google could be forced to unload some business units to comply with judicial rulings or new laws.

This does not however discredit the company’s strong financial performance as a catalyst for the bullish move on its stock. The company said it nearly doubled its profit over 2021. The company’s shares rose 65% that same year, marking its third straight double-digit annual gain.

However, expectations that the Federal Reserve will raise interest rates as soon as next month led to a January market retreat that marked the worst month for stocks since the first month of the pandemic. Alphabet has held up better than many, but shares are still down 5% following four rough weeks of trading