How to Trade Google as Advertising Revenue Remains Robust
One of the most well-known brands in the world, Google occupies an important place in many of our daily lives. Last month, the tech giant split their stock by 20:1 and, shortly afterwards, posted quarterly results which fell short of expectations.
Despite the earnings miss, there was cause for optimism within the results and, consequently, in the following sessions, Google’s share price responded well. For the year, Google share price remains down by more than 20%. But what does the future look like?
Learn how to trade Google shares below.
|Stock:||Alphabet Inc. (Class A)|
|Symbol for Invest.MT5 Account:||GOOG|
|Date of Idea:||24 August 2022|
|Time Line:||6 - 12 months|
|Position Size for Invest.MT5 Account:||Max 5%|
- The Invest.MT5 account allows you to buy real stocks and shares from 15 of the largest stock exchanges in the world.
All trading is high risk and you can lose more than you risk on a trade. Therefore, you should never invest more than you can afford. Start small to understand your own risk tolerance levels or practice on a demo account first to build up your knowledge before investing.
Why Buy Google Stock?
Investing in the stock market is always risky, but as we stand on the precipice of a potential recession, this statement is even truer than normal. In such uncertain times, investors usually gravitate towards stocks that operate in defensive industries, which are historically more resistant to economic downturns.
Typically, tech stocks are excluded from such conversations. However, there is an argument to be made that some tech stocks have become so big, so successful, so entrenched in their respective markets, that they have earned the right to be involved in the discussion.
Indeed, a handful of the big tech stocks have a fairly unique blend of both defensive and offensive characteristics, making them potential candidates to emerge from a recession relatively unscathed and subsequently reap the rewards from an economic expansion on the other side.
Alphabet, the parent company of Google, is one such stock that warrants consideration.
Google has a near monopoly in the global search engine market, in which it commands a market share of more than 90%. This dominance grants Google a significant amount of pricing power in terms of advertising, through which it generates its vast majority of total revenue.
True, in an economic downturn, advertising budgets inevitably shrink. But in Alphabet’s most recent quarterly results, advertising revenue grew 11.6% year on year, even as many of its competitors struggled in this arena. This is perhaps indicative of the fact that search engines are one of the most effective spots to advertise and, therefore, could be one of the last areas of spending to be trimmed from an advertising budget.
The strength of Google’s advertising business, as well as potentially shielding the company in a downturn, should allow it to excel during an economic expansion, as budgets for advertising once again increase.
Another box which Alphabet ticks for investors is its rich balance sheet. In their latest results, the tech giant had cash, cash equivalents and marketable securities which equated to almost $125 billion – more than enough to help it ride out any economic downturn which may materialise in the future.
There is certainly a lot to like about Google stock. However, it is difficult to predict exactly how individual stocks will react to economic uncertainty and anyone considering buying shares in Google should be braced for volatility in the coming months. In order to read more about the prospect of investing in Google, check out our article: ‘How to Buy Google Shares and Why”.
Google Stock Forecast - What Do the Analysts Say?
According to analysts polled by TipRanks for a Google stock forecast in the past 3 months, there are currently 30 buy, 2 holds and 0 sell ratings on the stock. The highest price level for a Google stock forecast is $186 with the lowest price target at $113.
The average price target for a Google share price forecast is $142.84 which represents around 25% upside from current levels, at the time of writing.
An Example Trading Idea for the Google Share Price
An example trading idea for the Google share price could be as follows:
- Buy the stock at $120 to allow for current market volatility.
- Target just below the average analyst price target at $142.
- Keep your risk small at a maximum of 5% of your total account.
- Timeline = 6 - 12 months
- If you buy 10 Google shares:
- If target is reached = $220.00 potential profit ($142 - $120 *10 shares).
It’s wise to remember that the share price is unlikely to go up in a straight line and it may even go much further down before it rises, if it rises at all. This is especially true currently, given the recent volatility in the global stock markets.
Therefore, it is crucial to exercise good risk management, which is one of the most important aspects of trading successfully. You should always know how much you could potentially lose on a trade and the precise risks involved.
Another factor to consider is the commission, which can eat into your profits. With the Admirals Invest.MT5 account you can buy US stocks from $0.02 per share; however, there is a minimum transaction fee of $1. So, the example trading idea above would have resulted in an overall commission of just $1!
How to Buy Google Stock in 4 Steps
With Admirals, you can buy shares in Google and over 4,300 other listed companies! In order to buy Google shares, follow these steps:
- Open an Invest.MT5 account to access the Trader’s Room
- Click Invest next to your account in order to open the MetaTrader WebTrader
- Search for Google shares at the bottom of the Market Watch window and drag the symbol onto the chart
- Click New Order at the top of the screen and enter the number of Google shares you want to buy
Click on the banner below to buy Google stock today! ▼▼▼
Do You See the Google Stock Price Moving Differently?
Remember that all analytics and trading ideas are based on the personal view and experience of the author.
If you believe there is a higher chance Google’s share price will move lower, then you can go short using CFDs (Contracts for Difference). The Trade.MT5 and Trade.MT4 accounts from Admirals both allow you to speculate on the price direction of a wide variety of stocks using CFDs.
This means you can trade long and short to potentially profit from rising and falling stock prices. Learn more about CFDs in this How to Trade CFDs article.
INFORMATION ABOUT ANALYTICAL MATERIALS:
The given data provides additional information regarding all analysis, estimates, prognosis, forecasts, market reviews, weekly outlooks or other similar assessments or information (hereinafter “Analysis”) published on the websites of Admirals investment firms operating under the Admirals trademark (hereinafter “Admirals”) Before making any investment decisions please pay close attention to the following:
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- The Analysis is prepared by an independent analyst Roberto Rivero, Freelance Contributor (hereinafter "Author") based on personal estimations.
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