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Fade the Move in Google: Fast Pros

Thursday, 19 Jul 2012 | 5:30 PM ET

“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."

After Hours Action: Google Spikes on Earnings
The Fast Money traders discuss the details of Google's earnings report, with CNBC's Jon Fortt.

However Seymour does have a caveat. "Valuations are cheap.”

Looking the numbers a little more closely, Google posted second-quarter earnings excluding items of $10.12 per share, up from $8.74 a share in the year-earlier period.

Net income was $2.79 billion, or $8.42 per share, on a consolidated basis.

Revenue rose 21 percent to $8.36 billion, from $6.92 billion a year ago.

Analysts had expected the company to report earnings excluding items of $10.04 a share on $8.41 billion in revenue, according to a consensus estimate from Thomson Reuters.


Posted by CNBC's Lee Brodie

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Trader disclosure: On July 19, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Tim Seymour is long AAPL; Tim Seymour is long BAC; Tim Seymour is long INTC; Tim Seymour is long SBUX; Tim Seymour is long FCX; Tim Seymour is long YUM; Guy Adami is long C; Guy Adami is long GS; Guy Adami is long INTC; Guy Adami is long AGU; Guy Adami is long MSFT; Guy Adami is long NUE; Guy Adami is long BTU; Jon Najarian is long AAPL CALL SPREADS; Jon Najarian is long IBM CALL SPREADS; Jon Najarian is long AMZN CALL SPREADS; Jon Najarian is long GOOG CALL SPREADS; Jon Najarian is long MSFT CALLS SPREADS; Jon Najarian is long INTC; Jon Najarian is long CIGX; Jon Najarian is long CME; Jon Najarian is long CBOE; Jon Najarian is long GLUU; Joe Terranova is long VRTS; Joe Terranova is long MCD; Joe Terranova is long USB; Joe Terranova is long GS; Joe Terranova is long JPM; Joe Terranova is long YHOO; Joe Terranova is long SBUX; Joe Terranova is long NKE; Joe Terranova is long WFM; Joe Terranova is long AAPL; Joe Terranova is long EMC; Joe Terranova is long NXPI

For Jason Helfstein
Oppenheimer & Co. Inc. makes a market in the securities of GOOG



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  • Chief Market Strategist for Virtus Investment Partners & CNBC Contributor

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