Google parent company Alphabet Inc‘s GOOGL GOOG shares have taken a beating, nosediving 35% from their historical peaks, firmly establishing its presence in bear territory.
Compared to its tech counterparts, Alphabet’s downturn appears graver, leaving shareholders pondering whether it’s time to brace for a resurgence or exercise caution.
Alphabet Stock Battling Bearish Currents
From a technical perspective, Alphabet’s shares are struggling against bearish forces. The stock is currently trading beneath its five, 20- and 50-day exponential moving averages (EMAs), indicating a robust bearish trajectory. Nevertheless, a glimmer of buying activity hints at a potential future shift in momentum.
Chart created using Benzinga Pro
With a current share price of $157.53, slightly above its eight-day simple moving average (SMA) of $153.17, there’s a faint bullish signal in the short term. However, the stock’s descent below the 20-day SMA of $159.68 and the 50-day SMA of $168.01 paints a bearish overarching narrative.
The 200-day SMA at $157.08 mirrors the stock price, with the stock residing beneath this average in recent trading periods.
Chart created using Benzinga Pro
The MACD indicator languishes at a gloomy negative 4.01, indicating further bearish sentiment, while the Relative Strength Index (RSI) of 45.74 deems Alphabet stock neither overbought nor oversold. The Bollinger Bands, spanning $149.03 to $171.41, see the stock lingering in the lower bearish band, pointing towards continued selling pressure.
Unpacking the Bearish Sentiment Among Google Stock Investors
What’s fueling the pervasive pessimism among Alphabet investors?
Primarily, the U.S. Department of Justice has lodged an antitrust lawsuit against the company, with Europe also looming in the shadows with its own antitrust inquiries. This heightened regulatory scrutiny has investors jittery about potential penalties that could cast a heavy shadow on the stock’s future.
Additionally, the colossal investment in AI is causing a stir. Alphabet, alongside its tech peers, is channeling significant resources into AI development, a venture laden with promise but straining short-term capital efficiency.
Can Alphabet Stage a Comeback?
So, what are the odds of Alphabet making a turnaround?
Firstly, its balance sheet remains robust. Revenue has been steadily climbing at 18.16% annually, with EPS surging by 21% over the last five years, bolstered by aggressive share buybacks. Nominal debt, ample cash reserves, and a recent dividend introduction sweeten the pot for long-term investors.
Once Alphabet successfully navigates the antitrust minefield and streamlines its AI-related expenditure, it could rekindle its erstwhile capital-efficient prowess, potentially setting the stage for a revival in the long run.
In the near term, however, the outlook for Alphabet stock remains grim.
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