The Alphabet share price has been in a strong downward trend in 2022 as concerns about its ad business remains. GOOG stock has plunged to a low of $83, which is about 43% below the year-to-date high of $152.
As a result, its total market cap has crashed to about $1.2 trillion, making it the fourth-biggest company in the world after Apple, Saudi Aramco, and Microsoft. Interestingly, Apple is now bigger than Alphabet, Amazon, and Meta Platforms, combined.
Is Google a good value stock now?
Alphabet stock price has been in a downward trend in the past few weeks after the company published weak quarterly results. The firm’s services revenue rose by just 2% YoY to $61 billion. It attributed this slow growth to forex reasons as the US dollar strength accelerated. Search revenue rose by 4% to $40 billion as the travel industry rebounded.
In a statement, Alphabet said that its ad business was also affected by a slowdown in YouTube and Network advertisements. Also, some industries like financial services reported weak revenue growth. Its YouTube revenue was affected by the strong growth of its Shorts business. While Shorts is a strong product, it is relatively difficult for Google to advertise in it.
So, is Alphabet a good investment? Fundamentally, we believe that Google’s parent company is a good investment for several reasons. First, it is the biggest player in advertising business. And unlike Facebook, it is not extremely affected by Apple’s iOS updates. Second, the company has a strong balance sheet, with billions of dollars in cash. It will benefit modestly as interest rates start rising.
Third, Alphabet has opportunities to cut costs. For example, it has a bloated workforce and the management has committed to reduce its costs by scaling down its investment in unprofitable ventures.
To be clear. Alphabet will be unlikely to go back to its previous growth patterns. Instead, the company has now transitioned to a good-value stock.
Alphabet share price forecast
The daily chart shows that the Alphabet stock price has been in a strong bearish trend in the past few months. It crashed below the important support level at $102.55, which was the lowest level on May 24. The stock also remains below all moving averages while the Relative Strength Index (RSI) has crashed to the oversold level.
Therefore, while the bearish trend will continue, there is a likelihood that the shares will resume the bullish trend and retest the resistance at $100.