How Will Alphabet Stock React To Its Upcoming Earnings?

Alphabet (NASDAQ:GOOG) is scheduled to release its earnings report on Thursday, April 24, 2025. As the date approaches, event-driven traders might find it useful to consider historical stock performance following past earnings announcements. Google currently boasts a market capitalization of $1.9 trillion. Over the trailing twelve months, the company generated $350 billion in revenue, achieving a robust operating profit of $112 billion and a net income of $100 billion.

Currently, consensus estimates project earnings per share (EPS) of $2.03 on sales of $89.2 billion for this upcoming report. This suggests anticipated growth compared to the same period last year, which saw sales of $80.5 billion and EPS of $1.89.

For those looking to potentially capitalize on the earnings announcement, two primary strategies based on historical patterns exist. The first involves analyzing Google’s stock reaction to previous earnings releases to gauge the historical probability of certain price movements. For instance, in 11 of the last 20 earnings announcements, Google’s stock experienced a median positive one-day return of 5.6%, with a maximum positive single-day jump of 10%. Understanding these historical odds could inform positioning before the earnings are released.

The second strategy involves examining the correlation between the immediate stock reaction after an earnings release and its medium-term performance. By observing the initial market response, traders might identify potential opportunities for subsequent positioning. Ultimately, while historical data can offer valuable insights, the actual market reaction to Google’s upcoming earnings will depend on how the reported results compare to these consensus expectations and overall market sentiment. That said, if you seek upside with lower volatility than individual stocks, the Trefis High-Quality portfolio presents an alternative — having outperformed the S&P 500 and generated returns exceeding 91% since its inception.

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Alphabet’s Historical Odds Of Positive Post-Earnings Return

Some observations on one-day (1D) post-earnings returns:

• There are 20 earnings data points recorded over the last five years, with 11 positive and 9 negative one-day (1D) returns observed. In summary, positive 1D returns were seen about 55% of the time.
• However, this percentage decreases to 42% if we consider data for the last 3 years instead of 5.
• Median of the 11 positive returns = 5.6%, and median of the 9 negative returns = -5.0%

Additional data for observed 5-Day (5D), and 21-Day (21D) returns post earnings are summarized along with the statistics in the table below.

GOOG observed 1D, 5D, and 21D post-earnings returns

Correlation Between 1D, 5D, and 21D Historical Returns

A relatively less risky strategy (though not useful if the correlation is low) is to understand the correlation between short-term and medium-term returns post earnings, find a pair that has the highest correlation, and execute the appropriate trade. For example, if 1D and 5D show the highest correlation, a trader can position themselves “long” for the next 5 days if 1D post-earnings return is positive. Here is some correlation data based on 5-year and 3-year (more recent) history. Note that the correlation 1D_5D refers to the correlation between 1D post-earnings returns and subsequent 5D returns.

GOOG Correlation Between 1D, 5D and 21D Historical Returns

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