Alphabet Shares Plunge 12.6% as BofA Values Google Search at 10x Earnings, Below Energy Sector

Alphabet's Class A shares fell 12.6% to $283.82 Thursday, the company's worst trading day since its 2004 IPO, erasing about $482 billion in market value. Bank of America now values Google's core search business at roughly 10 times earnings, below the S&P 500's 18.7x forward multiple and the energy sector's 13x. The selloff followed third-quarter results: search and other revenue grew 12% to $63.35 billion, missing the 15% analysts expected and decelerating from 17% in the second quarter and 19% in the first. Google Cloud revenue more than doubled to $30.71 billion with a 36.2% operating margin, but capital expenditures reached $51.4 billion and free cash flow came in at negative $9.1 billion. BofA analyst Justin Post kept a Buy rating but cut his price target to $380 from $430, lowering his target multiple to 24x from 27x on a "slowdown in high-margin search growth." Alphabet also booked an $8.7 billion mark-to-market hit on its SpaceX stake.