Price action among tech stocks has been generally bearish today. One of the key reasons for this downward trajectory is the performance of mega-cap leader Alphabet (NASDAQ:GOOG, GOOGL). In today’s afternoon session, GOOG stock is down nearly 3%. That outpaces the Nasdaq by a rather significant margin, driving a percentage of the index’s declines. This comes as Alphabet approaches a Google stock split on July 15.
Today’s move lower for many blue-chip tech stocks is chipping away at the gains many saw last week. As investors continue to digest this macro environment, volatility is reigning supreme.
One of the key drivers of this bearish shift is this week’s upcoming consumer price index (CPI) report. Inflationary pressures have become a major concern among investors. Accordingly, fresh inflation data is a catalyst that could work in either direction. Still, investors appear to be taking a cautious approach to the upcoming report.
If inflation numbers come in higher than expected, rates could continue to rise at a rapid clip. As interest rates rise, tech stock valuations also tend to get hit harder than other sectors, putting names like Alphabet in focus.
On top of that, we’re also currently entering a potentially contentious earnings season. Investor jitters heading into the Alphabet’s earnings report appear to be at play here, too.
So, let’s dive into whether GOOG stock is a buy heading into the Google stock split.
Is GOOG Stock a Buy Heading Into a Stock Split?
This year, stock splits have proven to be high-volatility events. As we’ve seen with other high-profile tech stocks like Amazon (NASDAQ:AMZN) and Shopify (NYSE:SHOP) recently undertaking stock splits, though, the price action heading into a split is typically positive. That makes today’s downward price action particularly concerning.
Most investors tend to view stock splits as positive catalysts for highly traded stocks. While stock splits don’t affect a company’s valuation in any way, lower prices per share make options cheaper. For traders, this is a great thing. Additionally, lower entry prices generally mean a more diversified investor base. Overall, these factors are bullish in most cases.
However, this isn’t the average market right now. Investors are battling a series of headwinds which could be pervasive for some time. Thus, volatility may remain high. Investors taking a cautious view appear to be looking to take some chips off the table right now. And for those who have been in GOOG stock for a while, taking some profits can’t hurt.
It’s unclear where GOOG stock is headed from here. That said, Alphabet will be an interesting stock to watch in the weeks to come.
On the date of publication, Chris MacDonald did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
