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

(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

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