Alphabet (GOOG, GOOGL), the parent company of Google, is scheduled to report results of its first fiscal quarter after the market close on Monday, April 23, with a conference call scheduled for 4:30 pm ET. What to watch for: 1. FALLOUT FROM FACEBOOK CONTROVERSY: On April 10 and 11, Facebook (FB) CEO Mark Zuckerberg testified before committees of the House of Representatives and Senate in the wake of the Cambridge Analytica data scandal. The executive reiterated that an ad supported service is still the best business model for the company and said he sees areas of potential legislation that he views as worthwhile to consider. Afterward, David Baser, Product Management Director at Facebook who leads a team focused on privacy and data use, stated in a blog post: "Many companies offer these types of services and, like Facebook, they also get information from the apps and sites that use them. Twitter (TWTR), Pinterest and LinkedIn (MSFT) all have similar Like and Share buttons to help people share things on their services. Google has a popular analytics service. And Amazon (AMZN), Google and Twitter all offer login features. These companies -- and many others -- also offer advertising services. In fact, most websites and apps send the same information to multiple companies each time you visit them." Investors will certainly be interest to hear Alphabet's take on the prospects for increased U.S. regulations, as well as their potential impact on the company and its financials. 2. YOUTUBE: On April 18, for the first time since the shooting at YouTube headquarters earlier this month, YouTube CEO Susan Wojcicki addressed its creator community and spoke about the future. In a blog post, she stated, "In February, we made the tough decision to set a new eligibility criteria to monetize on YouTube. While we know some creators found this change frustrating, it strengthened advertiser confidence, making monetization and the broader community on YouTube stronger for creators building their business on the platform." Wojcicki also said YouTube would continue to look for ways to improve communication with creators and enable them to strengthen ties to viewers. 3. AMAZON AD THREAT: On March 19, eMarketer issued a report in which it stated that while Google and Facebook may control the bulk of the U.S. digital ad market, their competitors are starting to eat into that share. In the report, the market research firm wrote that Google is "still the dominant player - a position it's expected to continue to occupy for the next several years," but predicted Google's share of the digital ad market will decline slightly, slipping to 37.2% in 2018 from last year's 38.6%. It added that "Amazon is slowly but surely chipping away at its larger advertising rivals." 4. EXPENSE VIEW TOO OPTIMISTIC?: On April 10, Morgan Stanley analyst Brian Nowak predicted that Alphabet's Q1 EPS will miss the consensus view by 8% as he believes consensus modeling of a $2B sequential decline in operating expenses, which he notes would be the largest sequential operating expense decline in 5 years, seems too optimistic given the company's investments in the cloud, YouTube and hardware. He also believes the company's large, important strategic investments will reinforce the need for improved disclosure from Alphabet. While he trimmed his price target on the stock to $1,175 from $1,200, Nowak is still confident in Alphabet's long-term opportunity and maintains an Overweight rating. More bullish on the near-term, Deutsche Bank analyst Lloyd Walmsley said he believes Street estimates are achievable and thinks an in-line quarter is enough for Alphabet given the current "tempered investor sentiment.". Walmsley recommends adding to positions into the print and keeps a Buy rating on the shares, though he trimmed his price target to $1,350 from $1,375.
