Google February Contracts Imbalanced Ratio Trades
Google Earnings Miss Shares Drop Over $50 What You Need to Know. In this live "stock market technical analysis" video we'll cover the Google sell off and how to trade it. Options traders got rocked on options expiration 1/20/2012 on the call side and most people were left scratching their head as the bull got killed. We called the top on Google at $670 and if you didn't listen you volunteered to be a victim of Friday's $53.58 sell off.
The Bull Case for Google:
Google's Miss May Present An Opportunity For Investors. Google Shares still have a weekly MACD buy signal and is maintaining it's longer term weekly moving averages. Google is now currently trading at 11.75 times forward looking earnings.
The company's investments in its Android mobile software and fledgling Facebook-like Google+ social network represent some of the company's key growth opportunities going forward. If Google + is gaining members then this is thought to be good for the company going forward. Google Short Term Pain Brings Long Term Opportunity.
Google's chief business officer Nikesh Arora said that mobile usage is growing "leaps and bounds", led by smartphones and tablets.
Google CEO Larry Page added there are now over 250 million activated Android devices, and said the holiday shopping season helped increase mobile usage, as consumers increasingly searched for products to buy.
The Bear Case for Google:
Google missed both its revenue and earnings targets after cost-per-click (CPC) — or money that marketers pay Google when Websurfers click on its search ads — decreased for the first time in two years despite record U.S. online commerce during the holiday season. Several brokerages cut their price targets on the stock.
Online advertising revenue per click fell in the quarter and this looks like it will continue for the foreseeable future as the online advertising market is currently weak. Insiders have sold hundreds of millions of dollars worth of shares over the last six months. The technicals look week. Google is now under its 50 day moving average and is about to go below its 100 day moving average (see chart, click to enlarge).
The acquisition of Motorola Mobility MMI is going to cause operating expenses to continue to rise at a time when Google is having problems controlling its own personal costs from its core business. In addition to increasing operating costs and lowering margins, the acquisition of Motorola Mobility has opened the door for Microsoft MSFT in the smartphone business. Microsoft's first phone product with Nokia (NOK), the Lumia 710, is generally getting good reviews.
Google +1, after a fast start, seems to be losing momentum and does not appear to a serious competitor to Facebook as was the hoped during development.
It appears that Google is looking to expand its presence in China again. Unfortunately that ship already sailed when Google pulled out to the mainland after Baidu BIDU totally gamed the company in search the first time. The company faces increasing competition in mobile and cloud computing from both Apple AAPL and Amazon AMZN.