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CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Tracking Alphabet's post-earnings performance: share price movements

As Alphabet Inc. announces Q3 2024 earnings, discover key factors influencing market volatility, driven by digital advertising and AI integration.

Trade charts Source: Adobe images

(AI summary)

Alphabet gears up for Q3 2024 earnings release

Alphabet Inc., Google’s parent company, is a global tech giant known for its search engine, YouTube, Android, and Google Cloud services. While digital advertising drives most of its revenue, Alphabet is expanding into areas like artificial intelligence (AI), cloud computing, and autonomous vehicles through its Waymo division.

Alphabet is set to release its third quarter (Q3) earnings on Wednesday, 30 October 2024 at 7.05am (AEDT). Historically, Alphabet shares exhibit varied price movements following quarterly earnings announcements.This article highlights post-earnings volatility, offering insights into Alphabet's share performance.

Key financials

Expectations for Q3

  • Revenue: $86.23 billion
  • Revenue growth: 10% year-on-year (YoY)
  • Earnings per share (EPS): $1.84

Comparison to previous quarter

  • Revenue: $84.74 billion
  • Net income: $23.62 billion
  • EPS: $1.89
Alphabet Adobestock image Source: Adobe images
Alphabet Adobestock image Source: Adobe images
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Post earnings performance analysis

  • Immediate reactions (one day)

Alphabet’s share price often reacts sharply on earnings day. For example, after Q3 2022, shares dropped by around 10%, reflecting investor disappointment, likely due to missed expectations. Similar declines occurred in the fourth quarter (Q4) 2022 and Q3 2023, both over 5%. In contrast, the first quarter (Q1) 2023 and the second quarter (Q2) 2024 saw gains of 4% and 6%, indicating a positive reaction to strong earnings.

  • Short-term adjustments (one week)

During the first week after earnings, Alphabet’s stock often adjusts further. For example, after Q3 2022 and Q3 2023, the stock extended losses, falling close to 10%. However, in Q1 2023, the stock rose by 18% within a week, showing increased investor confidence as earnings results were digested.

  • Medium-term trends (one month)

Over a month, Alphabet’s stock generally stabilises or deepens existing trends. After Q4 2022, the stock fell almost 17%, indicating lingering concerns. In contrast, Q1 2023 saw continued gains, with one-month growth over 10%, suggesting investor optimism. The one-month trend for Q1 2024 also reflected sustained positive momentum.

  • Overall patterns

The data reveals a recurring pattern of sharp declines after underwhelming earnings, particularly in late 2022 and 2023. Positive earnings reports, however, led to notable gains in Q1 2023 and Q1 2024, with the largest one-day and one-week gains in Q1 2023. Overall, Alphabet’s stock exhibits strong reactions to earnings, driving significant volatility.

  • Implications for investors

Investors should be prepared for volatility around Alphabet’s earnings announcements. Immediate reactions can indicate sentiment, but short-term and medium-term trends, like in Q1 2023, can contradict initial movements. For short-term traders, earnings provide opportunities for gains or losses, depending on market expectations. Long-term investors should assess earnings within the broader business context, as medium-term trends often provide clearer insights into the company’s health.

Risk management and careful analysis are key when trading around earnings releases to navigate potential rewards and risks. Investors interested in practicing their trading strategy without risk, might consider opening a free demo account.

Alphabet's post-earnings performance chart

Alphabet's post-earnings performance chart Data source: Bloomberg Image source: ClaudeAI
Alphabet's post-earnings performance chart Data source: Bloomberg Image source: ClaudeAI

This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.

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