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After Google's earnings report, nearly 500000000000 USD in market value evaporated, with analysts expecting the stock price to remain range-bound in the short term
BlockBeats reported that October 31, according to a report by CNBC, Google's parent company Alphabet saw its share price fall by more than 12%to 285 USD, shrinking its market value by nearly 500000000000 USD. Although Google Cloud revenue grew year over year by 103%, the market remained focused on earnings per share falling short of expectations and negative free cash flow amid continued investment in AI infrastructure.
Mike Khouw said in his CNBC column that Alphabet's core business fundamentals remain intact, but two obstacles stand in the way of a rapid short-term rebound. First, multiple institutions have downgraded their ratings, price targets, or future earnings forecasts. He noted that stocks subject to concentrated rating downgrades have historically underperformed the market or traded sideways over the following 30 days, while institutional repositioning also limits upward momentum. Second, the post-earnings gap down further damaged the technical pattern.
In terms of technical indicators,Alphabet s RSI had fallen to just above 20, and MACD sell signals had strengthened. However, Khouw believes that the stock price's proximity to 270.70 USD s 52-week low, combined with an extremely oversold condition, may limit further declines.
As a trading strategy, Khouw proposed using a short strangle options strategy to address the expected range-bound trading. He believes continued selling across the broader market is the main downside risk, while an unexpected positive catalyst driving a rapid rise in the stock price could threaten the strategy's short call leg.
Original article link https://m.theblockbeats.info/flash/374804