-1706695068.png)
Alphabet Sinks Despite Earnings Beat
The harsher nuances of equities trading confronted tech bulls yesterday. Both Alphabet and Microsoft saw their stock prices plunging despite better-than-forecast headline results. Alphabet bore the brunt of the misery with the stock now down around 7% from the YTD highs seen earlier this week. On the numbers front, Alphabet posted Q4 EPS of $1.64, above the $1.59 the market was looking for. Similarly, revenues were above forecasts at $86.31 billion vs $85.27 billion expected.
Advertising Revenues Slip
However, the finer details of the report proved dissatisfying to investors. In particular, a slight undershoot in advertising revenue for the full year at $65.52 billion vs $65.8 billion expected, seemed to underwhelm investors. Overall, the company beat total revenue forecasts with a 13% YoY gain, though this was not enough to assuage the selling.
Cost Cutting Drive Continues
Looking ahead, Alphabet assured investors that it would continue to work on re-engineering its cost base. This comes on the back of the company firing 1000 employees this month with warnings that further layoffs could be expected this year. While investors have been generally pleased with news of the layoffs, the severance fees over 2024 are expected to take a toll on profitability, adding to near-term headwinds for the company. Given the run up we’ve seen in recent months, some corrective action is to be expected and while the Fed still signals forthcoming rate cuts in 2024, the bullish outlook remains intact.
Technical Views
Alphabet
The rally above the 151.21 has failed for now with price reversing sharply lower to test the 141.36 level support. While this area holds, the bullish outlook remains. Should we break below here, however, focus turns to 130.28 next.
.png)
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.