Alphabet's Stock Slipped 2.2% After Sundar Pichai's Earnings Beat Was Inflated by a $77.1 Billion Unrealized Gain on Equity Holdings. Should Investors Discount That Gain When Judging the Real Growth Story?
Unrealized gains are lovely when they happen, but they can also turn into unrealized losses.
Overview
Accounting is complicated, which is why quarterly and annual reports are so long and boring to read. But when you see a company like Alphabet (NASDAQ: GOOG) reporting that its second-quarter earnings benefited from $77.1 billion in unrealized gains, you have to pause for a second. That's a huge number, but what does it really mean for the business?
Earnings are a snapshot, and generally accepted accounting principles (GAAP) make the final earnings number a lot more complicated than you'd hope. Unrealized gains are one of the many complications that investors have to deal with. Normally, unrealized gains aren't such a big deal, but sometimes they can be. When the gain is $77.1 billion, it needs extra attention.
Image source: Alphabet Inc.
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Originally published at www.fool.com.