Will Alphabet Reach Previous Highs?
Not many individuals outside the financial trading market have previously heard of Alphabet Inc but almost everybody has heard of Google and YouTube. Alphabet is an American company being traded on the NASDAQ and currently is the 4th largest technology company globally, only bested by Apple, Samsung and Foxconn.
Over the past 5 years, Alphabet has been one of the hottest stocks being looked at by traders. If we rewind the clock to 2015, we can see that on average the stock was priced at $545, and has this year reached a high of just under $1,525. Therefore traders had the possibility to benefit from the stock almost tripling in size.
Alphabet, like all stocks, took a major hit when today’s crisis hit, dropping to $1,054 per stock. However, since the beginning of the crisis, the stock has stayed within a stable uptrend showing dynamic growth amid positive statistics.
Recently, the company published a financial statement for the first quarter of 2020, and the figures exceeded analysts’ expectations of $40.8B, amounting to $41.16B. This value is higher than the 10% drop from the fourth quarter of 2019 ($46.08B) but taking into account the current crisis, the company has performed better than expected.
The earnings per share fell to $9.87, which is 45% less than $15.35 a quarter earlier. The net profit in the first quarter amounted to $6.836B, higher than the $6.657B it reached over the same period last year. The total debt of the company as of March 31st was $69.744B, which is better than the previous data of $74.467B. The capitalization of the company as of April 28th is $841.804B.
Citigroup raised its stock price target on Alphabet Inc yesterday to $1,600 from $1,400 and said it expects revenue to rebound sharply in 2021. “We now model 5% year-on-year growth in 2020, with full-year revenue reaching $169.6 billion, and we expect 20% year-on-year rebound in 2021, with full-year revenue reaching $203.4 billion”, analysts wrote in a note to clients.
Citigroup lowered revenue estimates for the second quarter to reflect the impact of COVID-19, which has hurt ad revenues. Google said on its first-quarter earnings call that search revenues were down 15% in March and April, while YouTube’s revenue growth decelerated to high single digits by the end of March.
The question traders now ask themselves is: Will Alphabet hit previous highs of $1,525 or will it further crash?
Well, if we look at the stock this week we can see the bears are in full control, with the stock dropping by $48 in just 3 days. The stock seems to be dropping outside trading hours as well which is rare and shows how much traders are eager to get out of the stock market. However, traders should be aware that the drop in value may not be specifically related to Alphabet but to the stock market as a whole. This week both American and European stocks seem to be steadily falling.
Due to the current market sentiment, traders should not only look at the Alphabet stocks but also the NASDAQ to determine the overall market conditions. In addition to this, traders looking to determine the future movement of the stock, can use as breakouts of the support and resistance price stated below:
Support levels: 1350.0, 1290.0, 1230.0.
Resistance level: 1530.0.
What can we make of this?
In conclusion, we could say that traders are searching for the right stock to trade on and a large percentage of the market is specifically interested in technology companies. Alphabet Inc is one of the largest technology companies which traders can view as an option and so far, it seems to provide the desired volatility.
Traders looking for further information regarding stocks and trading the right ones can arrange one-on-one sessions with eXcentral’s Market Analyst, Michalis Efthymiou.