Alphabet Inc’s Google (GOOGL) said over the weekend that it will restrict and if necessary prohibit advertising which promotes “dangerous content” on coronavirus conspiracy theories.
The policy update, which will be effective from August, will ban publishers from abusing the California-based search giant’s ad platform to promote and monetize content that relates to a “current, major health crisis and contradicts authoritative, scientific consensus”.
Examples of ad content which will be prohibited to monetize on, include conspiracy theories, such as that the coronavirus was manufactured in a Chinese lab as a bioweapon, or that it was made up by Microsoft Corp (MSFT) founder Bill Gates, or that the virus is a hoax.
Google already has a policy in place to ban ads which it coins as containing harmful content and that makes claims about disease prevention and “miracle” health cures. These include anti-vaccine promotions or content that encourages the use of home remedies in place of medical treatment such as consulting a doctor or going to the hospital.
The policy update comes as 2020 is expected to mark the first time in the company’s history when Google-search revenue will decline, according to eMarketer. In addition, a growing list of companies are joining the Facebook ad boycott, while COVID-19 is also having an impact on advertising budgets. Like Facebook, the majority of Google’s revenue is derived from advertising.
Needham analyst Laura Martin expects Google’s upcoming earnings report to reflect the coronavirus’ impact on ad revenue.
“We lower our earnings estimates for 2Q20 and FY20 owing primarily to weak ad categories including travel, entertainment, media, and retail,” Martin wrote in a note to investors earlier this month. “Until COVID-19 is controlled enough that the economy strengthens and consumer demand returns, we expect these categories to remain weak.”
Martin estimates that Google’s US 2Q20 revenue will contract by 7% year-over-year.
Nevertheless, despite the estimate drawback, Martin maintains a Buy rating on the stock with a $1,800 per share price target, which means shares will advance 19%, should the target be met over the next 12 months.
Shares in Google have fully recovered since dropping to a low in March and are now trading 13% higher than at the start of the year. The average analyst price target of $1,593.46 indicates the stock will increase about 5% over the coming year. (See Alphabet’s stock analysis on TipRanks)
Overall, the Wall Street rating outlook for Google remains bullish. The Strong Buy analyst consensus boasts 29 Buys versus 1 Hold.
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