Fines don’t harm Alphabet Inc. too much

Exchange: NASDAQ

Sector: Technology

Industry: Internet Information Providers

Entry strategy

Price: $1135—$1175

Stop-loss: under $1090

Take profit: minimal aim — $1355, then $1535

Investment horizon: 1 quarter to 1 year

Company details

Alphabet Inc. is a holding company based in California, USA. It owns several companies formerly owned by Google Inc. and Google Inc. itself. At the head of the holding are Larry Page and Sergey Brin, co-founders of Google.

The corporation is widely known for its web search engine. Above it, Alphabet offers a variety of services and tools for needs of its customers. Also Google is the author of many scientific, educational and cultural projects.

The main Internet products and services of Google Inc. are Android, Chrome, Google Cloud, Google Maps, Google Play, YouTube, corporate cloud services and hardware products.

The issuer’s capitalization is more than $800 billion (group +Mega).

Company financial performance

On July 23, 2018, the company published its report for the second quarter and first half of this year. Earnings per share was lower than analysts’ expectations and the second quarter was nominally weaker than the same period of the previous year (see Table 1).

Table 1. Financial results of Alphabet Inc. ($GOOG ) from Q2 2017 to Q2 2018. Source: Alphabet Inc. — Open original image

The record fines imposed on Google Inc. by the EU authorities made strong enough contribution to the slowdown in the growth of earnings per share in the second quarter. Negative exchange rate changes also affected.

    Nevertheless, for the first half of 2018 the corporation once again showed strong financial results:

  • sales increased by 25.6%;
  • net profit increased by 40.8%;
  • net operating cash flow increased by 28.44%.

The current prices have very optimistic expectations — that the corporation will remain the market leader and will show excellent financial results in the second half of 2018.

The main risk for this Internet giant remains the prospect of slowing business growth.

Technical analysis (trading plan)

Graph 1. Technical analysis of Alphabet Inc. ($GOOG) stock. Source: TradingView — Open original image

Published on the 12th of September, 2018


Also published on Medium.