October 18, 2012
It’s okay honey, it happens to everyone.

What are you talking about?

Today Google came prematurely released their earnings report much to the joy of short sellers and bears throughout the street.

It happens to the best of us.

No. No it doesn’t. 

Companies normally release their earnings reports after the closing bell during a conference call so they don’t interrupt the daily trading of their stock. It also allows analysts and investors time to digest the information, ask questions and decide what the stock should be worth going forward.

Google’s earnings report fell short of analysts’ estimates sending the stock price into a nose dive. The share price dropped 9% in a matter of minutes.

Apparently RR Donnelley, the company that was designated to compile the report, submitted the information before the CEO Larry Page gave the okay.

Is 9% percent a lot?

Yes and no.

If I lost 9% of the money in my wallet right now, I would lose $0.75

You’re broke.

Yes and no. I also don’t like keeping cash in my wallet.

However, Google has a lot more cash in their wallet than I do. They are one of the largest companies trading on the NASDAQ and at the time of this post have a Market Cap of 227.29 Billion dollars. When the 9% drop occurred, Google lost 19 BILLION Dollars of it’s market cap.

Google technically didn’t lose any money. However, the market basically said, “You earnings report missed our estimates so much that we think your company is now worth $19,000,000,000.00 less than it was to us before you released your earnings report.”

So what they gon’ do?

Not much. Larry Page didn’t really address the mishap during the official conference call (which is where then were originally supposed to discuss the earnings report). He simply stated that "our printers sent out the release early." 

Some analysts mentioned earlier this week that Google was due for a pullback given the stocks 30% increase over the past 3 months but no one expected the pullback to be this large.

I expect Google to rebound 2%-3% within the next two weeks but I think the stock is too risky to own. Maybe I’ll try a Deep In-the-money call option for January and see if I can get a 10% return.

Hit me with any questions or errors you find in the post.

-DPB

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