Alphabet's stock slumps to a three-month low—yet investors bet big on a rebound
Alphabet Inc (GOOG) shares have dropped to a three-month low, currently trading at $288.93. This marks a fall from recent highs of $309.41 and $314.90, with the stock still far below its three-month peak of $344.90. Despite the decline, some investors remain optimistic about its future value.
Recent trading activity shows strong interest in GOOG call options. Over 9,900 contracts have been traded at the $320.00 strike price—more than 57 times the previous number of open positions. Institutional investors are buying out-of-the-money calls, suggesting confidence in the stock's potential. Sellers of these calls receive an immediate yield of over 1.1%.
Investors are paying $3.20 per call, setting a breakeven point at $323.20. This represents an 11.8% increase from the current share price. The total potential return for selling shares at $320.00 stands at 11.85%. Alphabet has also announced a significant rise in capital expenditure. The company plans to spend between $175 billion and $185 billion, a sharp increase from the $91.4 billion projected for 2025. Analysts maintain an average price target of $359.53, which is 24% higher than today's trading level. Some projections even suggest the stock could reach $377, over 30% above its current value, based on strong operating cash flow.
The recent dip in GOOG's share price contrasts with growing investor activity in call options. With institutional interest and higher price targets, the stock's future movement remains a key focus. Alphabet's increased spending plans further highlight its long-term growth strategy.
