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Earnings Season Meltdown? 4 Big Names Tease Buy Zones Then Tumble

Loading the player… Alphabet ( GOOGL ), Microsoft ( MSFT ), Starbucks ( SBUX ) and Visa ( V ) were all trading at or near buy points going into their quarterly earnings reports last night. But in what could be seen as a big letdown for investors, all four issued disappointing results and/or guidance, which has sent the stocks tumbling below key levels. Not only is this notable because of their big names, but also because most of them are highly rated by IBD. Alphabet currently earns an IBD Composite Rating of 98 out of 99, while Visa has a 92, and Starbucks has a 90. Microsoft has a Composite Rating of 73, meaning it outperforms 73% of all stocks based on fundamental and technical factors. IBD’s Take: How do Alphabet, Microsoft, Starbucks, Visa measure up? Find out at IBD Stock Checkup Alphabet gapped down 5.4% in giant volume, breaching its 50-day line. It’s also triggering a sell signal, with shares now more than 5% below the cup-with-handle buy point at 777.41. The stock is trading 9% below its February high. Microsoft plunged 7.2% in heavy volume, with the stock breaking below the 50-day. Shares are now looking for support at the 200-day line. Microsoft was near its 56.95 buy point in Thursday’s session, but it’s now trading 9% below that level. Starbucks is dropping below its 50-day and 200-day moving averages in quick turnover, losing 4.9%. Shares are trading 7% below a saucer-with-handle buy point at 61.74, and 10% below their October peak. And Visa is now below its 10-day line, falling 2.1% in fast trade. It’s still holding above the 50-day and 200-day lines, which recently crossed in a bullish manner. Shares are now 3% below their cup-base buy point at 81.11. Whether this is a trend that will continue throughout earnings season remains to be seen, but we will continue to update you as reports from Facebook ( FB ), Amazon ( AMZN ) and PayPal ( PYPL ) come in next week.

Alphabet Price Targets Cut After Q1 Miss, But Analysts Positive

Alphabet ( GOOGL ) shares sunk Friday, as the stock was handed at least seven price-target cuts after the world’s largest Internet company posted Q1 earnings and sales late Thursday that missed Wall Street’s expectations . Still, many analysts remained upbeat about the search leader’s prospects. Alphabet stock fell 5.4% on the stock market today , to 737.77 and falling just below the key 10-week line, testing a stock that broke out of cup-with-handle base at a 777.41 buy point last week. Shares are now down 5.4% from the buy point and near the recommended selling range of down 7% to 8%. But the stock has risen more than 30% over the last 12 months, helping Alphabet gain a spot on the IBD 50 list of leading growth stocks. Alphabet shares touched their all-time high of 810.35 on Feb. 2. IBD’s Take: How healthy is Alphabet’s stock and those its main rivals? Find out at IBD Stock Checkup Leading social network Facebook ( FB ), Alphabet’s top rival for digital advertising dollars, also saw its stock fall on Friday. Facebook stock fell 2.5% Friday, to 110.56. Facebook is set to report earnings on Wednesday after the close. Analysts saw the Q1 miss as a temporary stumble. “Looking past the headlines, we see several favorable trends,” Monness Crespi Hardt analyst James Cakmak said in a research report Friday. “First, the core operating margin is improving, expanding 140 basis points to 37.8%. “Second, although ‘other bets’ losses widened to $802 (million from $633 million), losses rose at significantly slower rates than revenue, thereby yielding more moderate growth in the net figure. Third, the primary growth driver for Google is mobile search. We cannot emphasize this enough, as what used to be a headwind for the company is now becoming a tailwind. Further to that, key assets like YouTube and programmatic (ad) efforts are on the upswing. And fourth, we are finally seeing the balance sheet put to work with $2.1 billion in repurchase.” With its earnings release, Alphabet said that during Q1 it spent $2.1 billion on share repurchases, and that it still has $1.4 billion in repurchase authorization, with no expiration date. Revenue was a “modest disappointment,” wrote Pacific Crest analyst Evan Wilson in a research note, but adding that “we believe that’s more than offset by a new passion for expense control. We remain excited about the combination of revenue growth, expense control and cash return and would be buyers of GOOGL.” He maintained his overweight rating on Google stock, with a price target of 910. Image provided by Shutterstock .

Microsoft, Google Bury The Hatchet Amid EU Regulatory Probe

Microsoft ( MSFT ) and Alphabet ’s ( GOOGL ) Google have agreed to withdraw regulatory complaints against one another, following up on an agreement to end patent infringement litigation last September. The move to withdraw regulatory complaints comes as the European Union’s antitrust chief intensifies a probe into Google’s Android software business. The EU also is investigating whether Google favors its own shopping service in Internet searches. Microsoft says that it’ll now stay out of any regulatory inquiries in Europe and other regions that involve Alphabet and Google. “Microsoft has agreed to withdraw its regulatory complaints against Google, reflecting our changing legal priorities. We will continue to focus on competing vigorously for business and for customers,” Microsoft said in a statement . Google also issued a statement that said: “Following our patent agreement, we’ve now agreed to withdraw regulatory complaints against one another.” Microsoft will drop its membership in two groups that have lobbied vs. Google, says a Re/Code report . The EU antitrust chief is also probing contracts with mobile phone makers as well as wireless service providers that sell devices using Android software. Both companies late Thursday posted Q1 earnings misses that sent shares of both down in the stock market today . Microsoft stock was down 7.5% Friday afternoon, and Alphabet stock was down 5.5%. Losses widened for Alphabet’s “Other Bets” moonshot projects, while Microsoft’s talk of weakness in the global economy surprised at least one analyst.