Google Share Price Faces Dynamic Resistance Ahead of Q2 2020 Earnings

Summary:

Google share price facing dynamic resistance ahead of Q2 2020 earnings release. Will the price break above the rising trendline?

Google’s parent, Alphabet, is one of the big tech companies to release Q2 2020 earnings this week. After recently reaching a new all-time high, Google share price settled for $1511 at the closing last Friday.

Together with Apple, Amazon, Facebook, Microsoft, and Tesla, Google is credited for much of the advance seen since April in the US stock market. In other words, a miss for the big tech companies this week may lead to the stock market erasing some of its gains for the year.

Google share price currently meets dynamic resistance. It is not the first time it does so, and every single time so far, the price was sent back to the pivotal $1000. Will this time be different?

Google Q2 2020 Earnings Preview

The market expects $8.27 EPS for the second quarter, below the $9.87 delivered in the previous quarter. The company trades at a premium of almost 100% when compared with the sector when using P/E Non-Gaap trailing-twelve-months as a valuation metric.

Google does not pay a dividend currently, and it operates with a 55.08% gross profit margin – only slightly above the tech sector median of 50.67%. However, it excels at return on common equity, where it outpaces peers by a factor of 4:1.

At a time when tech stocks look pretty expensive, Google may benefit from its robust business model and growth potential in AI and cloud computing. On the flip side, regulatory pressures, especially from Europe, may affect the company’s profitability moving forward.

Google Share Price Facing Resistance

Ever since it first attempted to break the $1000 mark in early 2018, Google share price kept the level in sight. Moreover, at every attempt to make a hew higher high, it met dynamic resistance so strong that it sent the price back to the pivotal level.

This is the third time in a row when Google share price faces the rising trendline, and it feels like a make or break moment. Depending on the earnings to be announced later this week, Google may finally overcome the level or risk a move back to $1000.

Both bulls and bears would want to wait for Q2 2020 earnings before initiating a position. However, at the current level, Google looks weak, despite just printing a new all-time high. Risking $200 from the current $1500 level while targeting $1000 makes sense if Q2 2020 earnings miss.