“Google could trade up to $625 after these earnings,” says top trader Guy Adami, managing director of stockMONSTER.com. “But the play is fade the move.”
If you’re nimble Adami says historically the right trade has been doing the opposite of the market's knee-jerk reaction. That is buying when the stock sells off and in this case selling the rip on better than expected results.
Pro traders Jon Najarian, co-founder OptionMonster.com, and Joe Terranova,founder of EmergingMoney.com, both agree with Adami. That’s partly because they don’t think the Street is terribly excited about Google long-term – and therefore they not going to buy stock in any meaningful way.
“That’s not to say there isn’t a little upside potential,” explains Terranova, “but this is not a stock that’s aggressively owned.”
Najarian thinks the Street’s lack of interest in Google is due to the way the management team spends. He feels the co-founders’ interest in things like a space program and other non-core endeavors sends a signal that the company isn’t as focused on the bottom line as it could be.
“I agree that there’s a discount on this company because of CEO Larry Page,” muses trader Tim Seymour. “I'm a hedge fund manager and I see the changes in management over the years as a series of missteps."