Alphabet Shares Plunge 13% as SpaceX Paper Loss Drags Q3 Earnings Below Estimates

Alphabet (GOOGL) fell 13% on Thursday, its worst single-day performance since going public, after third-quarter results missed expectations on slowing search growth and investment losses tied to its SpaceX stake. The company reported net income of $26.2 billion versus $37.3 billion expected, with EPS falling to $2.12 from $2.87 a year earlier. Equity investment losses cut quarterly earnings by $8.7 billion, or 55 cents per share, largely driven by a decline in the value of its roughly 550 million SpaceX shares, which fell 11% to about $150 each in the quarter. Barron's suggested Alphabet follow Berkshire Hathaway's (BRK.A) practice of reporting operating earnings excluding mark-to-market swings on large equity holdings. Adjusting for the losses, EPS would have been about $2.67 rather than $2.12. Analysts estimated SpaceX alone reduced EPS by roughly 70 cents after tax, partly offset by gains in Alphabet's Anthropic stake. Alphabet in the prior quarter reported EPS of $9.11, including $6.26 from investment gains.