Why I'm Taking Profits On Alphabet Ahead Of Earnings

Risk of every sort is rising in the market, and since we strapped on this trade 10 trading days ago, Alphabet (NASDAQ:GOOGL) has rocketed some $75. We are now at the top end of the recent range.

Alphabet reports its Q1 earnings after the close on Monday, and I expect them to be blockbuster, reporting quarterly revenues of more than $24.9 billion, up 20.7% YOY. Earnings per share should rise by a meteoric 19.15% to $9.70 YOY.

That annualizes out to $100 billion in sales a year, and you want to own a company that sells that amount of anything, no matter what it is.

In other words, Alphabet is one of the world’s largest companies growing at a small cap growth rate

However, the earnings event usually triggers a move up or down 5% in the share price.

After the last quarterly report, the move was down 5%. There will be the usual hand wringing over declining advertising rates, even though they are selling more of them.

The other half of the online advertising duopoly, Facebook (NASDAQ:FB) is seeing the same problem.

Further middling the picture is the fact that this will be the first reporting quarter under the new consolidated reporting system.

For us, that means it is a bird in the hand versus two in the bush. This is a buy the rumor, sell the news market. The extreme confidence of January is now a distant memory.

I am going to keep the bird in hand and cook it up for dinner on an open spit and serve it up with a nice raspberry sauce.

So I am going to seize the easy money here and sell my position in Alphabet (GOOGL).

If you are a short-term trader, take profits here, and buy it back on the next 10% dip.

If you are a long-term investor keep (GOOGL). It is going much higher over time, and you’ll probably be too frightened to buy the next fear driven market plunge.

And Alphabet’s expansion of cloud-based revenues promises to be an absolute winner. It is in effect getting ahead of the cloud.

That is where the future lies.

Disclosure: I am/we are long GOOGL.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I"m selling my Alphabet shares on Monday