Alphabet’s (GOOG) lackluster first-quarter earnings brought out the bears Tuesday.
Stifel downgraded Google’s parent company to “hold” and maintained a price target of $1,287.
Alphabet posted revenue of $36.3 billion, about $1 billion short of the $37.3 billion analysts had expected. Just 17% higher than a year ago, the increase marks the slowest growth the company’s seen since 2015.
In a note to investors, Stifel analyst Scott Devitt said the "unexpected degree of revenue deceleration” may make hurt Alphabet’s valuation growth over the next year.
Alphabet’s chief financial officer, Ruth Porat, said on the earnings call that most of the deceleration is related to YouTube.
“While YouTube clicks continue to grow at a substantial pace in the first quarter, the rate of YouTube click growth rate decelerated versus a strong Q1 last year, reflecting changes that we made in early 2018, which we believe are overall additive to the user and advertiser experience,” Porat said.
Youtube has been experimenting with its advertising products as of late. The video-sharing site expanded its work against abuse on the platform by changing its algorithms, aiming to prevent harmful content from showing up as recommended videos. It also raised the requirements that a channel and or creator must meet in order to monetize videos in a move to reduce the risk of advertisers finding their ads played against unsavory content and pulling out.
Alphabet’s main competitors for digital ad dollars include Facebook, Snap, Amazon and Twitter.
Bridgette Webb is a producer at Yahoo Finance. Follow her on Twitter: @bridgetteAwebb.