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Communication Services : Interactive Media & Services | Large Cap Growth
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Alphabet Inc. is a holding company. The Company's segments include Google and Other Bets. The Company's Google segment includes Google Services and Google Cloud. Its Google Services products and platforms include Android, Chrome, Gmail, Google Drive, Google Maps, Google Photos, Google Play, Search, and YouTube. Its Google Cloud provides enterprise-ready cloud services, including Google Cloud Platform and Google Workspace. Its Google Cloud Platform enables developers to build, test, and deploy applications on its infrastructure. Its Google Workspace collaboration tools include applications like Gmail, Docs, Drive, Calendar, Meet. The Google segment is engaged in advertising, sales of digital content, applications and cloud offerings. Its hardware products include Pixel phones, Chromecast with Google TV and the Google Nest Hub smart display. The Other Bets segment is engaged in the sales of Internet and television services, licensing and research and development (R&D) services.

Closing Price
$2,795.73
Day's Change
13.11 (0.47%)
Bid
--
Ask
--
B/A Size
--
Day's High
2,824.01
Day's Low
2,750.00
Volume
(Average)
Volume:
1,191,296

10-day average volume:
1,283,980
1,191,296

Auto retailer stocks suffer sharp selloff, after Morgan Stanley says sell Penske, Sonic

3:26 pm ET November 17, 2021 (MarketWatch)
Print

By Tomi Kilgore

Analyst Adam Jonas sees 'secular industry headwinds' ahead for auto dealers despite 'peak' earnings

Shares of auto retailers suffered a broad and steep selloff Wednesday, after Morgan Stanley turned bearish on Penske Automotive Group Inc. and Sonic Auto Inc., while citing concerns over secular threats to the franchise dealer model the group leans on.

The six biggest losers within the SPDR S&P Retail exchange-traded fund (XRT), of the ETF's 91 of 106 components that were declining, were the stocks of auto retailers.

Penske's stock (PAG) was among those loss leaders, as it tumbled 10.4% toward a two-month low. It had closed at a record $113.61 on Oct. 25.

The automotive and commercial truck retailer was downgraded to underweight by Morgan Stanley analyst Adam Jonas. His $90 stock price target implies a further 10% downside from current levels.

Another big decliner was Sonic's stock (SAH), which shed 8.6% toward a four-month low. Jonas also cut his rating to underweight, as his $40 stock price target was about 15% below current levels.

Of the franchise dealers he covers, three are now rated underweight, three are equal weight and none are overweight.

Among the XRT's other biggest decliners, shares of Group 1 Automotive Inc. GPI took an 11.5% dive after closing at a record on Tuesday, AutoNation Inc. AN sank 9.7% after closing just shy of a record on Tuesday, Lithia Motors Inc. LAD tumbled 9.0% toward a 10-month low and Asbury Automotive Group Inc. ABG dropped 8.5% toward a 4 1/2-month low.

Jonas said turning bearish on Penske and Sonic, and the fact that he now skews to the downside on the whole group, is "a reflection of secular industry headwinds despite peak earnings."

The individual downgrades and bearish lean on the sector comes after the overall group reported third-quarter results that expectations, with Penske and Sonic reporting record revenue, as supply shortages have helped drive up prices. Jonas suggested the group has reached "peak" earnings, given the market's "muted" reaction to the strong results.

Also read: Why buying a car will be harder and more expensive through the end of the year.

Jonas said he sees "the inability of legacy OEMs [original equipment manufacturers] to control the consumer experience in a direct-to-consumer model as one of the biggest threats to legacy OEMs over time -- even bigger than the threat of electrification itself."

Don't miss: How auto makers like Ford and GM are reimagining the future of car buying.

Also, based on discussions with a "wide range" of electric vehicle OEMs, Jonas said he "does not expect to see any use the franchise dealer model."

The SPDR retail ETF (XRT) pulled back 2.1% in afternoon trading Wednesday, after closing at a record on Tuesday.

The XRT has gained 9.5% over the past three months, while the S&P 500 index has tacked on 5.4%.

-Tomi Kilgore

	

(END) Dow Jones Newswires

November 17, 2021 15:26 ET (20:26 GMT)

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