☁️ Alphabet Soup: Buy or Bye?

Plus, a legendary sandwich is evolving—will you embrace the change?

October 04, 2024

Happy Friday afternoon to everyone on The Street. Here's a snapshot of where markets ended the trading session, plus tomorrow's trade idea delivered to you today.

  • 🟩 | US stocks rose Friday after data showed nonfarm payrolls grew by 254,000 jobs in September, vastly exceeding the forecasted gain of 150,000 from economists polled by Dow Jones.

  • 📈 | One Notable Gainer: Abercrombie & Fitch shares jumped 9% after JPMorgan added it to its catalyst watch, citing strong back-to-school sales momentum.

  • 📉 | One Notable Decliner: Spirit Airlines shares dropped 25% after a report on its potential bankruptcy following a failed merger with JetBlue.

  • ☁️ | Tomorrow's Trade: Alphabet Soup: Buy or Bye? Scroll down for more.

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S&P 500 Heatmap. Credit: Finviz

All Stock Heatmap. Credit: Finviz

Global ADR snapshot. Credit: Finviz

MARKET MOVERS

RIVN (-3.2%) Rivian Shares Drop After EV Maker Slashes Production Target (Bloomberg)

SMMT (+2.6%) Summit Therapeutics Stock Jumps as Lung Cancer Drug Placed on FDA Fast Track (Investopedia)

JBLU (+14.2%) Frontier, JetBlue Stocks Soar on Report of Spirit Airlines Bankruptcy Talks (Bloomberg)

UAL (+6.5%) United Airlines Shares Gap Up - Here's What Happened (MarketBeat)

VST (+4.5%) Vistra's stock leads S&P 500's weekly winners, to extend big lead in YTD gains (MarketWatch)

OVERHEARD ON THE STREET

CNN: The NLRB ruled Howard Schultz violated labor law in 2022 by telling a barista unhappy with Starbucks to work elsewhere.

QZ: McDonald's will launch the Chicken Big Mac in the U.S. on Oct. 10 for a limited time at participating locations.

Reuters: Waymo will expand its robotaxi fleet with Hyundai's IONIQ 5 EVs, starting on-road testing by late 2025.

BI: Morgan Stanley estimates Amazon could save $3 billion by cutting nearly 14,000 managers to reduce bureaucracy and change the employee-manager ratio.

Reuters: The EU's top court ruled Meta must limit using Facebook data for targeted ads, backing privacy activist Max Schrems' complaint.

TOMORROW’S TRADE IDEA, TODAY

Monopoly or Not, Google is a Buy

Regulatory Risk

Google parent company Alphabet’s (GOOG) stock has been slumping recently and is down around 9% over the past three months. This is largely due to the Justice Department’s recent decision to label its search engine business a monopoly, which could result in government intervention.

While many investors are worried about Alphabet, Pivotal Research Group’s Jeffrey Wlodarczak isn’t one of them. He initiated coverage at a buy rating with an upside of 25%.

Already Accounted For

Wlodarczak acknowledged that any government regulation could have negative impacts on the company, but believes that is already priced into the stock.

Additionally, he believes that those same negative impacts could be offset by the fact that Alphabet may no longer need to pay for default search placement. Not to mention, its cloud-computing division’s massive profits offer plenty of cushion.

Political Risk

Wlodarczak see’s Alphabet’s search engine as a highly competitive business with a “deep moat protecting its dominance.” Its cloud-computing business currently sits in third place in terms of market share, so it has plenty of room to grow.

He also believes that a potential Harris presidency could help solve some of its legal ties thanks to her relationship with Alphabet’s legal team. However, a Trump presidency could mean quite the opposite.

Are you bullish or bearish on Alphabet (GOOG) over the next 12 months?

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Meet the world’s first hearing aids with dual processing. hear.com’s devices are backed by cutting-edge German technology, providing double the power + clarity. Start your 45-day no-risk trial.

ON OUR RADAR

CNBC: A Missouri judge has blocked Biden's student loan forgiveness plan until further ruling, halting the U.S. Department of Education from proceeding.

WSJ: U.S. ports reopened after dockworkers ended a three-day strike, accepting a 62% wage increase over six years.

QZ: In major cities, wedding costs can exceed home prices, except in Los Angeles, where a wedding is $48,000 versus a $68,384 down payment.

CNBC: Hurricane Helene's recovery could exceed $34 billion, likely requiring federal aid as Congress is on recess until November.

YESTERDAY’S POLL RESULTS

🟩🟩🟩🟩🟩🟩 🐂 Bullish

🟨🟨🟨🟨⬜️⬜️ 🐻 Bearish

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