Selling Alphabet (GOOG) Shares is the Wisest Bet Now as the stock troubles near 980 to 990 and forming medium term top. Is it a wise decision to sell? Yes as the news surrounding also points top formation in Alphabet shares.
Disappointment in earnings:
The alphabet is a very profitable and will remain a profitable high growth company going forward. The company has already reached a scale that established high barriers to entry to create another YouTube platform, search engine, or to penetrate the mobile market through a different type of software. Therefore, any significant decrease in the operating margin is unlikely.
Alphabet shares fell 3% after second quarter results resurfaced a worrying trend that the company’s costs are rising as it spends more to expand Google’s newer and fastest-growing advertisement businesses.
Europian Commission Fine:
The Europian commission announced that it had imposed fine on Google to the amount of $2.89 billion for abusing the dominant position of the search engine. This implies a decline of $4 per share as it has 700 million shares outstanding.
Selling Alphabet (GOOG) Shares is the Wisest Bet Now:
Alphabet has been on an uptrend for the past 9 years.In 9 years the stock has only three corrective pullbacks higher than 10%.
The most recent pullback shows the prices may drop to $850 and $800 per share, at that point, it will be a rare opportunity to buy the company for long-term investment.
The reasons for a correction do not suggest the end of Facebook and Google dominance in the digital advertising industry. It is a normal and healthy pullback and broad market correction leads to this kind of correction.
Finally, the correction could be an excellent opportunity to buy this blue chip stock for long term investment.