Alphabet Inc. (NSD: GOOG) saw its stock price fall 8% yesterday as the market overreacted to Google’s AI chatbot event. Despite persistent headwinds in the ad sales market, Google’s fourth-quarter earnings were solid and not bad at all. The 8% drop in Google’s market valuation appears petty to me, and I believe the market/analysts undervalue Google’s potential. Google’s 4Q-22 earnings report was much stronger than the market is willing to acknowledge, and investors have had more than a year to factor in the possibility of slowing sales growth for Google. Google’s profits in 2022 were $59.98 billion, or $4.56 per share, indicating that it is making money faster than it can spend it.
Profits are expected to be $6.09 per share in 2024, resulting in a P/E ratio of 16.4x. The market anticipates a 19% rebound in Google’s per-share profits in 2024, implying that the ad sales slump will likely not be an issue next year. However, it is always possible for a stock price to fall further, especially if the trend is already negative.
Share Buyback Program
A share repurchase program, also known as a stock buyback program, allows a company to purchase its own outstanding shares, reducing the number of shares available on the market and increasing the value of each remaining share.
The purpose of a share repurchase program can vary, but it is often seen as a sign of a company’s confidence in its own future prospects, as well as a way to return value to shareholders.
In Alphabet’s case, the share repurchase program was approved by the company’s board of directors in 2017, and allows for the repurchase of up to $8.59 billion of its Class C capital stock. The program does not have a set expiration date and is subject to ongoing review by the board of directors.
Despite its strong profits, its share price has been lagging behind in recent times. As a result, the company may consider buying back its own stock in order to boost its share price.
Share buybacks, also known as stock buybacks, is a common strategy employed by companies to increase the value of their shares and improve their financial performance. When a company buys back its own stock, it reduces the number of outstanding shares in the market, which can increase the value of the remaining shares. This can boost the company’s earnings per share (EPS), making it more attractive to investors.
In addition, when a company buys back its own stock, it sends a positive signal to the market, indicating that the company believes its stock is undervalued and that it has confidence in its future prospects. This can increase investor confidence, leading to an increase in the share price.
It is important to note that share buybacks are not always a guarantee of a company’s success. The company must carefully evaluate the potential benefits and drawbacks of such a program, and make sure that the funds used for the buyback are not needed for other important initiatives, such as research and development, marketing, or debt repayment.
Alphabet has apparently planned to buy back $100 billion worth of stock in 2023, and it’s possible now with the recent drop in the share price, that buybacks might start to pick up steam.
Alphabet Stock Price Forecast & Analysis:
Alphabet Inc Class C, a leading technology company, has received strong attention from financial analysts, with 23 experts weighing in on the stock’s future performance. The average forecast among these analysts is that the stock’s price will reach USD 128.34 within the next 12 months. This optimistic outlook is reflected in the average analyst rating of “Strong Buy.”
Additionally, Stock Target Advisor’s own analysis of Alphabet stock price, determining a “Slightly Bullish” outlook. This conclusion is based on a careful examination of the stock’s technical indicators, with 8 positive signals and 4 negative signals taken into consideration.
Currently, GOOG stock is trading at USD 95.46, following a closing price on the previous trading day. The stock has experienced some fluctuations in the recent past, with a drop of -13.34% over the past week and a modest increase of +6.66% over the past month. However, over the last year, the stock has seen a more significant decline of -31.13%.
Overall, with a strong average analyst rating and a slightly bullish outlook from Stock Target Advisor, the future looks promising for Alphabet stock. However, as with any investment, it is important to consider both the positive and negative indicators before making a final decision.