#Google #Tech #Ukraine
With the russia ukraine conflict continuing into its second month many investors trying to understand the implications on sectors beyond the energy space let’s lock in on the impact to the internet sector with oppenheimer analyst jason helstein jason always good to see you here uh if europe does in fact enter a recession what does that mean to the likes of a
Google uh so yeah we we have looked at it broadly how to think about it um and and he really has to do with right the amount of initially um russian energy that gets imported and you can kind of look country by country right germany is the largest supporter but if we look at um advertising um digital advertising was forecast uh previously to grow about 10 based
On some of the major ad agencies uh based on something like gdp you know up uh seven and a half percent um historically when you have recessions advertising as a percent of gdp shrinks right um because it is actually a way to kind of protect margin for companies so we think broadly if advertise if gdp in europe was a slow one to two percent which i think some
Um economists are now forecasting um advertising could be down five percent um what that would mean for um an alphabet specifically we think they get about 30 of their advertising revenue out of europe so if you apply kind of that sensitivity um you could potentially see you know basically like uh basically a five percent hit to their ad revenue um you know if
That’s probably within the advertising kind of universe probably the worst you know kind of the company with the most exposure or the most risk to it hey jason julie here um i’m curious what you think about that combined with sort of regulatory what’s happening in europe i mean does that also do you think they’re going to end up taking a revenue hit from some
Of the expected changes there um or do you think that it’s mostly confined to what’s happening on a broader economic basis in europe um yeah i mean look we’re already seeing moves where they’re willing to capitulate on some of these app store fees it’s not surprising that they’re starting with um companies who have subscription businesses they already kind of
Had more attractive payment terms um you know for businesses that were over 12 months um and they were already kind of were rehearsing workarounds with you know again some of the more prominent companies such as match and obviously spotify as their beta on this new project so there is an impact uh you know as far as like when we think about the overall value of
Google i mean if we think google’s worth something like uh you know uh an enterprise value before cash of like 2.1 trillion um you know google play and hardware is maybe like 32 billion of it so it’s pretty small um you know we you know we don’t we don’t really see that as um uh you know a long-term headwind and we think they’ve been preparing for it jason you
Also cover uh uber and i’m of the opinion that their announcement last week that they’ll be working uh with taxi companies uh in new york it is a big deal do you see it as a big deal and what does it mean to its competitor lift uh it’s a few things number one i think it’s it clearly acknowledges that their biggest issue is supply and meaning driver supply and so
While they are doing a better job than lyft according to um you know metrics we track in the first quarter as far as kind of onboarding and driver downloads it’s still not enough right i mean i think everybody acknowledges the the prices are elevated and the wait times are not that bad maybe more than we were used to but the price is definitely high and if you
Think about it once upon a time you know uberx was you know at the same or less than a taxi and it was like perceived to be a better experience and now it’s meaningfully more expensive and so um you know clearly consumers wanna hail with uh an app and you know take the uncertainty of standing there in the street with your arm in the air so okay you know can
You solve basically two issues which you helped the taxi industry which you know is basically going through kind of a you know a reboot um after covid um and it’s been widely reported what’s happened with taxi medallion prices um and so look i i think it’s very symbiotic i think if you look outside the u.s there are plenty of markets where uber actually started
With taxis but there wasn’t kind of a robust black car market to start with um and there may have been kind of regulatory issues to bringing people driving their own cars right which was the uberx model and so look in new york uberx is a quiet side regulated business anyway you’re right you need a tlc license there’s minimum wages so it’s a lot more like the
Taxi business out albeit there’s no you know no standards on uber sets the standards of what kind of car you can drive right where tlc sets the standards don’t know what a taxi is so look i think it’s going to be a win-win um i i i would imagine that lyft will be able to join the program um uber has a much more robust technology r d budget than than lyft does
So it makes sense to me that the the two vendors who provide the technology that’s in taxis would integrate with uber first but my guess is once it’s built out that lift will join the program as well and just really quickly jason in like 30 seconds um you know uber’s had an issue with driver relations if you will does getting taxis on the platform to hurt those
Relations at all i feel like it’s been less of an issue i do think they’ve been trying to be super supportive of drivers during the pandemic drivers are making more money um because again it’s a take great business so if they’re charging more the drivers are getting more now the question is are the drivers you know busy throughout the day you know during all
Times of day right because rates move around based on supply and demand um so i i you know look i do think at the end of the day you know there needs to be incentive if you bring a nicer you know car on the platform you should charge more for it right and you can make an argument that because rates haven’t really reflected per se service levels and they’ve
Been more a function of just raw supply and demand there’s actually less incentive to to join uber as a platform with a nicer car a newer car um you know we all know that there’s issues getting cars today getting used cars the inflation and car and then you have gas prices right so i think there’s a lot of factors going on and i do think that just you know i
Think the whole it goes this whole ecosystem gets better um integrating taxis and you know again supportive of their you know i guess the goal of bringing every global taxi online by 2025. yeah jason i’m on a real hot streak of finding some really bad uh really bad uh uber cars so hopefully my luck changes oppenheimer now is jason helstein good to see you
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How Google and other Big Tech stocks may be impacted by the Russia-Ukraine war By Yahoo Finance
