Google / Alphabet Earnings Preview
When? After Market Close Thursday, Oct 27
Has the market priced in a pixel perfect quarter for Google? Since bottoming out in late June near $660, the shares have been on fire, first staging a summer rally up into the $760-$790 area. Then, after a few weeks of consolidation, the shares have rallied up above $800 to new highs.
Some of the gains in recent weeks have been driven by speculation on the launch of the new Pixel smartphone. Not only are traders speculating Pixel could take on the iPhone, but also that it could help Google to capitalize on Samsung’s stumbles and take a commanding market share among Android users.
The street is expecting Google to report sales of about $18.0B up from $17.5B last quarter. Although Pixel only launched last week after the quarter ended, traders will be looking for signs of how the launch has gone and comparing it with the iPhone7 launch. Traders may also look to guidance for signs of how much of an impact Pixel may have on Google’s results going forward in terms of sales, margins and earnings.
With the shares trading up at all-time highs, very high expectations have been built into the share price. Technically, however, the stock appears vulnerable with a negative RSI divergence suggesting slowing upward momentum. Positive news would need to be really really good to drive share shares higher and the potential for profit-taking against the news appears high. Any sniff of disappointment, could send the shares back into their previous mid-August to mid-October trading range.