Big advertisers are punishing Google over its YouTube problem by pulling some of their ads.
The good news for Google and its Alphabet parent company: This won’t hurt Google’s core ad business.
The bad news for Google and its Alphabet parent company: Investors are worried anyway.
Here’s what the second part of the equation looks like: GOOGL shares are down more than 4 percent since Friday, when news reports about big brands’ ads running against offensive YouTube videos really got going. That means Alphabet has lost about $25 billion in market cap in less than a week.
In the long-term, though, Google should be able to work this out. First and foremost because advertisers aren’t complaining about the thing that really makes Google go: Its core search business.
YouTube and Google’s display ad business are fast-growing, and big by any other standards: Mizuho Securities analyst Neil Doshi thinks YouTube alone could be a $12 billion business this year.
But that’s still a sliver of the company’s search revenue. Doshi thinks that in a worst-case scenario, where advertisers cut YouTube’s revenue by 10 percent this year, Alphabet’s earnings will shrink by less than 1 percent.
Finally, a bit of perspective for Alphabet investors: A year ago, GOOGL was trading at $757. Today, even after a steep drop, it’s at $835. If you’ve held your shares for 12 months, you’re still up more than 10 percent.
This article originally appeared on Recode.net.