Alphabet Stock Remains a Buy on Any Dip With Two Catalysts Ahead

Stock Market

It seems like Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) stock haven’t moved much lately and it’s down nearly 11% year-to-date. But there are two catalysts that should help bolster the stock this month.

Specifically, investors should keep an eye on GOOGL stock because of its upcoming earnings report and the Google stock split.

Ticker Company Recent Price
GOOGL Alphabet $2,311.07

GOOGL Stock Split Coming Soon

Alphabet will have a 20-for-1 stock split on July 15. This will make its stock much cheaper than its current price of more than $2,300 a share. The stock will trade at $112.25 assuming the stock split was made based on the closing price as of June 29, 2022.

The Google stock split does not change anything in terms of valuation for Alphabet, but it can attract a lot of investors to buy the stock, as it will seem too cheap to ignore.

There are two things we might expect for GOOGL stock after the stock split. First, the share price could witness short-term volatility. Second, this volatility could be permanent and more intense over time. We could see the stock move 1%, 2% or more at each trading session as the trading volume could get bigger. Investors who could not buy the stock at its price of over $2,000 a share can trade it now as it will trade in the range of about $112 a share if nothing else happens until mid-July.

The Q2 2022 Earnings Report Will Set the Tone

Another possible catalyst for Alphabet this month is its Q2 2022 earnings report. The company is expected to report earnings on July 26 after the market close.

The Q1 2022 earnings report was a mixed one, as the firm missed on earnings-per-share and a beat on revenue. The EPS GAAP figure of $24.62 was a miss by -$1.14, but revenue of $68.01 billion was a beat by $121.29 million.

The estimates for Q2 2022 are an EPS GAAP figure of $26.05 and a revenue estimate of $70.35 billion. Notably, Alphabet had a positive EPS surprise in the past three out of four quarters.

The news that Google has phased out free G Suite for small enterprises and added more game demos to its Stadia cloud gaming market is positive, as it demonstrates the firm can add additional incremental revenue.

Ultimately, Alphabet has excellent financial strength and its profitability is very strong. It has these features, all while demonstrating plenty of growth. As such, investors should consider adding shares of Alphabet to their portfolio on any significant dip.

On the date of publication, Stavros Georgiadis, CFA  did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Stavros Georgiadis is a CFA charter holder, an Equity Research Analyst, and an Economist. He focuses on U.S. stocks and has his own stock market blog at thestockmarketontheinternet.com. He has written in the past various articles for other publications and can be reached on Twitter and on LinkedIn.

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