Alphabet has had a great start to 2023, up around 12% since the 6th of Jan. On Thursday, it is set to report earnings of $1.18 on revenue of $76bn.

Financials

Taking a look at Alphabet’s (Google) fiscal year 2021, which ended on the 31^st of December versus 2020. In 2021, Alphabet reported $257bn in revenue where $146bn of that was gross profit. This was an increase of around $49bn in gross, after tax and operating expenses, the net income totalled $76bn. The net income rose 88% year-on-year. As a result of a pandemic surge, which played a big role in the spike in its profits, earnings per share for 2021 came in at $5.69 (up 92% YoY). Furthermore, glancing at the balance sheet, Alphabet demonstrates an excellent balance between its assets to liabilities. Total assets rose by $40bn whereas total liabilities only rose by $20bn, hence, the total equity of the company grew to $251bn from $222bn. Additionally, another $3bn was added to its cash-on-hand pile, which now sits strongly at $139bn.

Technicals

Alphabet is expected to report its earnings on Thursday 2^nd of February, it is expected to release earnings of $1.18 on revenue of $76.07bn. From a technical perspective, its stock currently trading at around $98.13 a share. On the daily timeframe, we can see that the price has been gradually edging towards the tough resistance sitting at $100.63 (corresponds with the descending trendline). A break above this crucial bearish trendline could suggest an upward shift in sentiment. The earnings on Thursday will play a key part in the direction of this stock in the upcoming weeks. So, as a positive report can push the price higher, a negative one can also hammer it down. Therefore, towards the downside, support sits at $97.35 then at $96.72 then at $96 (corresponds with the ascending trendline). A break below $96 may see the price fall towards the major support at $93.76. Looking at the technical indicators, MACD is positive and so is RSI as it reads 61.

Alphabet has announced in recent weeks that it will lay off 12,000 employees, its highest-ever round of layoffs. Even though this action had a positive reaction on its stock price, investors should not be wary and anticipate that a drop in earnings may wipe all the optimism away.