Stocks’ Details

Alphabet Inc

September Quarter Highlights: Alphabet Inc (NASDAQ: GOOGL) is a leading technology company that offers a wide range of products and services like Search engine, Maps, Ads, Gmail, Android, Chrome, Google Cloud and YouTube. For the September 2020 quarter, the company reported total revenues of $46,173 million, up 14% on the previous corresponding period (pcp), driven by the decent performance from Google Cloud and Play and increase in advertiser spend in Search and YouTube. Over the quarter, the company was focused on making the right investments to support long term sustainable value. At the end of the quarter, the company had total cash and cash equivalents of $20,129 million and marketable securities of $112,467 million.

September Quarter Results (Source: Company Reports)

Focus Areas: Looking ahead, the company is focused on making investments in land and buildings for data centers, offices and information technology infrastructure. For its Google Cloud platform, the company is investing aggressively in its go-to-market capabilities, product development and technical infrastructure to support long term growth.

Valuation Methodology: P/E Multiple Based Relative Valuation (Illustrative)

P/E Based Relative Valuation (Source: Refinitiv, Thomson Reuters)

Note: All forecasted figures and peers have been taken from Thomson Reuters, NTM-Next Twelve Months

Stock Recommendation: Over the last six months, the stock of GOOGL has provided a return of 22.68% and is trading higher than the average of its 52-weeks price level band. On the technical analysis front, the stock has a support level of ~$1,512.247 and a resistance of ~$1,681.85. We have valued the stock using Price to Earnings multiple based illustrative relative valuation and have arrived at a target price with an upside of high single-digit (in % terms). For the purpose, we have taken peers like Apple Inc (NYSE: AAPL), Microsoft Corp (NASDAQ: MSFT), Twitter Inc (NYSE: TWTR), etc. Considering the company’s decent performance in Q3FY20, future focus areas, long-term fundamentals, and valuation, we give a “Hold” recommendation on the stock at the closing price of $1,616.11, up by 3.8% on 30 October 2020.

Facebook, Inc.

Q3FY20 Results Highlights: Facebook, Inc. (NASDAQ: FB) is a leading social media company that enable users to connect and share with friends and family via mobile devices, personal computers, virtual reality headsets, and in-home devices. The company owns several other social media platforms like Instagram and WhatsApp. For the September 2020 quarter, the company reported total revenue of $21,470 million, up 22% on the pcp, reflecting decent growth in advertising segment. Facebook daily active users stood at 1.82 billion on average for September 2020, reflecting a year-over-year increase of 12%. For the quarter, the company reported total net income of $7,846 million, up 29% on pcp. At the end of September quarter, the company had Cash and cash equivalents and marketable securities of $55.62 billion.

Q3FY20 Results (Source: Company Reports)

Outlook: For Q4 FY20, the company expects its year-over-year ad revenue growth rate to be higher than Q3FY20 growth rate, driven by continued strong advertiser demand during the holiday season. FB expects its total FY20 expenses to be in the range of $53-54 billion and total capital expenditures to be around $16 billion.

Valuation Methodology: P/E Multiple Based Relative Valuation (Illustrative)

P/E Based Relative Valuation (Source: Refinitiv, Thomson Reuters)

Note: All forecasted figures and peers have been taken from Thomson Reuters, NTM-Next Twelve Months

Stock Recommendations: Over the last six months, the stock of FB has provided a return of 30.07% and is trading higher than the average of its 52-weeks’ price level band. On the technical analysis front, the stock has a support level of ~$254.85 and resistance of ~$285.17. We have valued the stock using Price to earnings multiple based illustrative relative valuation and have arrived at a target price with an upside of low double-digit (in % terms). For the purpose, we have taken peers like Twitter Inc (NYSE: TWTR), Alphabet Inc (NASDAQ: GOOGL), and Netflix Inc (NASDAQ: NFLX). Considering the company’s decent Q3FY20 performance, expected increase in Q4FY20 ad revenue growth rate, and decent outlook, we give a “Hold” recommendation on the stock at the closing price of $263.11, down by 6.31% on 30 October 2020. 

Tesla, Inc.

Q3FY20 Result Highlights: Tesla, Inc. (NASDAQ: TSLA) is an automobile company mainly involved in the development, manufacturing, and sale of high-performance fully electric vehicles (EV) and energy generation and storage systems. As of 30 October 2020, the company’s market capitalization stood at ~$367.82 billion.  During the September 2020 quarter, the company produced over 145,000 vehicles and delivered nearly 140,000 vehicles. For the quarter, the company reported total revenue of $8,771 million, up 39% on the previous corresponding period (pcp), driven by the growth in vehicle deliveries as well as growth in other parts of the business. The company’s net income stood at $369 million in Q3FY20, higher than $150 million reported in pcp. At the end of September 2020 quarter, the company had cash and cash equivalent of $14,531 million, representing a YoY growth of 172%.

Q3FY20 Segment (Source: Company Reports)

Outlook: Looking ahead, the company expects its operating margin to grow over time, ultimately reaching industry-leading levels. The company is on track to start deliveries from Model Y capacity at Gigafactory Shanghai, Gigafactory Berlin and Gigafactory Texas in 2021. The company is committed to significantly invest in its product roadmap. The company is targeting to deliver half a million vehicles in 2020.

Stock Recommendation: The stock of TSLA has provided a return of 176.64% in the last six months and 35.6% in the last three months. The stock is currently trading higher than the average of its 52-week’s price level band. On the technical analysis front, the stock has a support level of ~$307.92 and resistance of ~$420.21. The company’s current ratio stood at 1.63x in Q3FY20, higher than the industry median of 1.24x, demonstrating that the company is well equipped to pay its short-term obligations. Further, the company seems well capitalized to fund its product roadmap, long-term capacity expansion plans and other expenses. Considering the company’s liquidity levels, its decent performance in Q3FY20, expected growth in operating margin, modest outlook, we are of the view that the stock will witnesses further upside in the coming times. Hence, we give a “Hold” recommendation on the stock at the closing price of $388.04, down by 5.55% on 30 October 2020.

Comparative Price Chart (Source: Refinitiv, Thomson Reuters)

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