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Trading Roundup: How Did Google’s Hardware Announcement Affect the Markets?

October 06, 2017 18:53

In case you missed it, this Wednesday Google announced eight new hardware products. The conference – held in Mountain View, California – saw two versions of the Pixel 2 smartphone, an AI camera, AI headphones, a new VR headset, a new laptop, and 2 new Google Home speakers. It was a bumper announcement, seemingly very well received by press and consumers alike. But how did this announcement affect the financial markets and Google's share price? Read on to find out…

The Original Pixel

Google's original Pixel smartphone received excellent reviews on its release last year, as the search-engine giant moved away from its Nexus range of handsets. Despite such great reviews, however, Google and its phone have struggled to catch a good chunk of the smartphone market share to date.

Analysts estimate that customers bought around 552,000 Pixels in 2016, in comparison to Apple selling 78 million iPhones in a Quarter. Samsung sold nearly 5 million "Galaxy Note 7" phones between its launch and its October termination.

Google's market share for smartphones sold is now less than 1% globally, whilst Samsung has 18% and Apple 18.2%, according to Ramon Llamas from the International Data Corporation. Despite Google trying to assert itself in the smartphone market, it's still a small player; even though Samsung's smartphone empire runs from Google's Android operating system.

Watch This Space...

Whilst Google explores the smartphone market, it only represents a small share of their Group company Earnings. It is unlikely to boost these earnings and its share price unless its latest smartphones begin to take a larger share of the smartphone market – but the latest announcement of hardware definitely means you should watch this space.

What Does This Mean for the Markets?

First, let's briefly explain what Alphabet is. You may not have heard the news, but Alphabet is actually the the parent company of Google.

Upon creation, Alphabet retained Google Inc.'s stock price history and continues to trade under Google Inc.'s former ticker symbols "GOOG" and "GOOGL"; both classes of stock are components of major stock market indices, such as the SP500 and NASDAQ-100.

Note – As a trader, I prefer to call these "Equities", because the underlying asset in the Index is Equities.

Google's latest earnings report says that earnings was USD26Bn for Q2 2017, and Net Income was USD3.5Bn, with Advertising Revenues totalling USD19Bn. The index has been in a steady uptrend and the announcement of the Pixel 2 smartphone could encourage a trend continuation.

How to Trade Google Share CFDs

Using the MetaTrader 5 trading platform we can make an analysis where the index could be bought and possibly make a return on our investment following the the Pixel 2 announcement and subsequent release date (19 October).

Keep in mind that whenever a company releases earnings, there is an air of uncertainty in the markets. Investors will use the guidance number to judge how a company is going to perform over the next three months. Volatility should begin to rise into earnings as investors are uncertain as to which way the market will take the stock. This rise in volatility increases the option premium, making everything more expensive.

The price is expected to go up and with the release of the new flagship device, which will fight to be top-dog with Samsung's S8 series and Apple's (AAPL) iPhone 8 and iPhone X. Because of this, we might see a continuation of the uptrend in the GOOG index. 950.30 - 957.25 is the POC (Point of Confluence – aka entry zone), where new buyers might join up. The price resistance is at 977.40, and if the price gets higher, targets are 983.09 (previous resistance), 990.77 and 1008.66. Obviously we see an uptrend and if earnings go up the GOOG index might become more expensive, reaching new heights.

Source: GOOG H4, MetaTrader 5 Supreme Edition

The (Potential) Power of News Trading

This is the key take-away here, many may not realise that there is often a direct link between events that take place in the news media, and the price of certain instruments in the financial markets. Price fluctuations occur all the time and regular volatility may give you an opportunity to make a return on investments that you make.

Before making any moves in the financial markets, it's extremely important to ensure that you understand the risks involved. We also highly recommend practising on a Demo account, in a risk-free environment.

Risk free Forex demo account

Today, we've focussed on Google's announcement and its impact on the GOOG share CFD price, but different news stories may impact other financial markets. Admiral Markets offers many different products, including Forex and CFDs on shares, stock indices, commodities, bonds and cryptocurrencies!

We offer the opportunity to trade on the world's most popular trading platforms – MetaTrader 4 and MetaTrader 5. We've boosted these platforms even further with our very own MetaTrader Supreme Editions, featuring an extra 60+ tools, indicators and many other additions that may amplify your trading experience!

You can also trade directly in your browser with MetaTrader WebTrader, no downloads or specific OS' needed!

Have a great weekend,

Nenad Kerkez

Risk Warning

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 85% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.