Alphabet (Google) Earnings Instant Reaction
Matt Weller, CFA, CMT April 28, 2020 9:23 PM
On balance, traders are cheering the report on the initial release, with the stock trading up about 4% in extended trading as we go to press...
Many market participants, ourselves included, refer to the period from mid-April to the end of May when major US companies report their results from the first quarter of the year as “earnings season.” And while that technically covers the period when almost all publicly-traded firms share their results, many traders are most interested in just a single week, or to be more precise, a 72-hour window when the most dominant, profitable megacap technology companies report…
…and that 72-hour window just kicked off with results from Alphabet, the parent company of Google!
- GOOG reported $9.87 in earnings per share, below consensus analyst expectations of $10.36.
- Revenues came in at $41.16B (+13% y/y), above expectations of $40.29B
- Advertising still makes up the vast majority of the company’s revenue (82%)
- Traffic acquisition costs (TAC) came in at $7.5B as expected
- Cloud revenue was $2.78 billion
- YouTube advertising revenue was $4.04 billion
Also of note, internal documents released last week showed that the company is considering hiring freezes and cutting marketing budgets by up to 50% in response to COVID-19, so the company is clearly wary about its near-term prospects.
On balance, traders are cheering the report on the initial release, with the stock trading up about 4% in extended trading as we go to press. That said, the after-hours trading is notoriously volatile and takes place on low volume, so traders will want to keep a close eye on where the stock opens for normal trading tomorrow morning.
From a technical perspective, Alphabet shed over 3% today before reporting earnings, so a slight bullish reaction to today’s release would only get the stock back to where it opened the week. The stock continues to churn at a critical area, with the $1260-$1275 area marking the confluence of the 50- and 200-day exponential moving averages, as well as the 50% Fibonacci retracement of the March swoon.
Source: TradingView, GAIN Capital
Overall, the most prudent course of action for traders may be to wait for a breakout beyon the two week range from $1240 to $1300 to signal the next tradable swing.
As the week proceeds, we’ll be following the earnings results from the other $500B+ market cap tech stocks including Facebook and Microsoft (tomorrow), as well as Apple and Amazon (Thursday), not to mention other noteworthy names like Tesla (tomorrow) and Twitter (Thursday). Stay tuned!
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.