Loup Ventures' Munster On Alphabet's Q1: 'Hats Off To Them' For Ad Performance

Alphabet Inc GOOG GOOGL showed in its first-quarter earnings report that advertising business remains strong a dramatic slowdown, Loup Ventures managing partner Gene Munster said Tuesday on CNBC's "Fast Money."

'Hats Off' To Alphabet, Munster Says

Alphabet management described its performance as a "tale of two quarters," with advertising revenue growth of 20% in the first nine weeks, Munster said.

The following three weeks showed a drastic fall versus the start of the quarter, yet it was still flat year-over-year, he said. 

"A flat business in this environment is impressive, so hats off to them for an incredible advertising business."

Munster Says Alphabet An Ad Business At Its Core

Google's management noted search activity for coronavirus information was four times greater than searches during the Super Bowl.

While this is "really good" for its advertising business, it is important to keep on mind how ad buyers are reacting to the virus, Munster said. 

At its core, Alphabet is almost a pure advertising business as the cloud unit accounts for just 8% of total revenue, the venture capitalist said. At the same time, this could already be reflected in Alphabet's stock at a "pretty healthy" multiple of 26 times next year's earnings, he said. 

What's Next For Alphabet

The "good news" for investors moving forward is that ad buyers can "come back relatively quickly" to resume any disrupted purchases, Munster said.

The Google model, unlike Facebook, Inc. FB, has no "lag effect," as ad buyers can stop their purchases immediately, he said.

Alphabet Class A shares were trading 7.25% higher at $1,321.94 in Wednesday's premarket session.

Related Links:

4 Geared ETFs for Alphabet Earnings

YouTube Extends Fact Checking To The US To Combat Coronavirus Fake Information