Alphabet, $Alphabet(GOOGL)$ Google's parent company, the 1.65 trillion market cap behemoth is reporting Q1 2022 earnings next Tue 26 Apr. Is it likely to outperform, generating alpha?
Revenue Alpha?
Analysts expect Alphabet to report revenue of $55.9 billion, up 22.7% from prior year quarter even if earnings per share is expected to dip to $25.52 (3%). For the full year, projected earnings per share is $116.75 (+4.06%) on revenue of $248.87 (+17.35%) from prior year.
While about 80% of Alphabet’s revenue comes from advertising (Google Ads) its earnings are more resilient than say Meta $Meta Platforms, Inc.(FB)$, as it cornered 92% of the online search market from its two nearest competitors, Microsoft Bing $Microsoft(MSFT)$ and Yahoo!. It is also more diversified, and generates revenues from cloud-based services (Google Cloud), Android apps and subscriptions (Google Playstore), hardware (Pixel smartphones, Google Nest smarthome products, and Chromecast digital media players) and online video sharing (YouTube Premium, TV, Music).
Price Action Alpha?
Looking at Daily chart (see below), price has retraced to multi-month strong support zone around $2,500, where it has rebounded at least four instances in the past (red circles).
Daily Chart GOOGL
If $Alphabet(GOOGL)$ reports positive earnings and guidance, there are Long opportunities as price would likely “pop” to near 50 SMA lines about 7.54% or $2,651. Such price action is possible as a “pop” of about 7.56% happened after the last quarter earnings beat. On the other hand, if earnings miss or it gives poor guidance, the $2,500 support line might finally break, and presents Short opportunities up to $2,400.
While $S&P 500(.SPX)$ is down –8.40% YTD, GOOGL price is lagging further, at –13.92%, Given Alphabet’s positive outlook for the rest of 2022 and the 20-to-1 stock split in July potentially acting as catalyst, this ironically means more chance for its stock price to rise, and outperform its benchmark.
If you ask how I would trade this earning, on balance, I am bullish on Alphabet, and like its namesake, would take an Alpha-bet!
Comments
$Alphabet(GOOGL)$ fell big with broader Markets; closed 22 Apr at $2,392.71 (-4.15%), close enough to the $2400 zone I mentioned pretty quick! We will know Mon 25 Apr if $2,500 support hold or break. We either get a quick rebound back around it, possible with short squeeze or after the 5th try, this support is really broken [吃瓜]