Alphabet Inc (GOOG)

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GOOGL Plummets on First-Ever Drop in Revenue
By: Schaeffer's Investment Research | July 31, 2020

• Alphabet reported revenue that was higher than Wall Street's estimates, but lower than the year prior
• The equity is still up over 20% year-over-year, however

The shares of Alphabet Inc (NASDAQ: GOOGL) are down 4.4% at $1,470.42 at last check, after the technology giant reported second-quarter profits of $10.31 per share on $41.16 billion in revenue, much higher than Wall Street's estimates of $8.21 on $37.37 billion. The company attributed the strong results to more advertisers using internet search engines to reach potential customers during the COVID-19 pandemic. And despite the recent results constituting the company's first-ever decline in revenue, GOOGL still earned no fewer than 14 price-target hikes this morning, including one from Susquehanna to $1,850 from $1,550.

On the charts, Alphabet stock has completely recovered from its late-March lows near the $1,008 level. Shares have been getting consistent support from the 40-day moving average since the end of June, with the security's latest all-time-high coming in at $1,587.05 on July 21. Longer term, GOOGL sports a 20.8% year-over-year lead.

Analysts were largely optimistic toward Alphabet stock coming into today, with 29 of the 30 in coverage sporting a "buy" or better rating, while only one carried a tepid "hold." Meanwhile, the 12-month consensus price target of $1,653.77 is a 13.4% premium to current levels.

That sentiment is echoed in the options pits, where calls are preferred. GOOGL sports a 50-day call/put volume ratio of 2.10 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits in the 99th percentile of its annual range. This suggests a healthier-than-usual appetite for bullish bets of late.

Today's options activity shows calls overwhelming puts. So far, 13,000 calls have crossed the tape -- three times the average intraday amount, and almost twice the number of puts traded. Most popular is the weekly 07/31 1500-strike call, followed by the 1495-strike call in the same weekly series, with positions currently being opened at both.

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