After its 20-for-1 stock split, the Google parent’s stock has not traded all that well. Here’s how it’s setting up ahead of the earnings report.
In February, the company reported strong earnings, announced a big buyback plan and declared a 20-for-1 stock split. Roughly a month later tech and online-retail giant Amazon (AMZN) – Get Amazon.com Inc. Report announced a stock split.
Amazon stock enjoyed a nice rally ahead of its 20-for-1 stock split but then struggled afterward.
For the Google parent Alphabet’s stock, the shares rallied about a week ahead of the split, which began trading on a split-adjusted basis on July 18.
The stock split does not appear to have been the catalyst that some investors were hoping for. It didn’t help that Snap (SNAP) – Get Snap Inc. Class A Report reported incredibly disappointing quarterly results, which sent its stock plunging almost 40% in a single session.
With Alphabet set to report earnings after the close on Tuesday, investors may be a bit worried about a disappointing result.
We’ve seen the stock fall ahead of the event; it’s down in each of the past two weeks and down slightly on July 25. Let’s look at what the chart is telling us.
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Alphabet stock is near a critical support level, which comes into play near $105. The 2022 low sits just below this zone, at $101.88, and right near the monthly VWAP measure.
As you can see on the chart above, Alphabet stock was also forming a series of higher lows, a bullish technical development. That’s as the shares were riding uptrend support (blue line), although that level has since failed.
Additionally, there’s been clear resistance up near $120, while Alphabet is currently below all its short- and medium-term moving averages.
The downside is pretty clear: $100 to $105 is must-hold support.
If Alphabet stock breaks below this, it loses the $105 breakout level, the 2022 low, the monthly VWAP measure and the psychologically relevant $100 mark — which was also support in 2021.
That could open the door down to the low $90s, which was a prior breakout area and where the 200-week moving average comes into play.
I recognize that that level seems somewhat far away and thus unlikely. Keep in mind, though, that the quarter doesn’t have to be a disaster for it to disappoint investors.
While Alphabet has been one of the strongest stocks in tech, that doesn’t mean it’s immune if the earnings really underwhelm investors — and if it comes alongside a broader-market decline in the coming days and weeks.
As for the upside, the bulls need Alphabet stock to clear the 10-week moving average, putting $118 to $120 in play, followed by $125.