RBC Capital analyst Mark Mahaney sees the near-term impact on Google (NASDAQ: GOOGL) from the YouTube ads as "minimal."
Mahaney commented, "Yes, this is a headline negative and we can understand why brands would be upset. To put the potential Rev/EPS impact in context, we built a very simple analysis based on the following assumptions: YT is roughly $14B of Revenue in 2017, and GDN is $4.8B (GOOG does not disclose so these are very rough ests); GDN pays 70% TAC; YT & GDN have roughly the same Net margins as our estimates for Alphabet as a whole (26.7% GAAP NI margins on Net Revenue). With this as a backdrop, a 10% hit to YT and GDN revenue in 2017 would be a 1.7% reduction to Net Revenue / GAAP EPS ($1.5B / $0.59) and a 2% hit would be 0.3% reduction ($309MM / $0.12). However, we are maintaining our current ests."
The firm maintained an Outperform rating and price target of $1,025 on GOOGL