Why Google Stock Is Still An Undisputed IPO Benchmark To Learn From

Google stock’s IPO performance is the benchmark by which this IBD-style trader measures all other market debuts.

The tech giant’s 2004 initial public offering marked the dawn of the modern internet era, with Alphabet (GOOGL) eventually growing into a powerhouse in social media, advertising and now generative AI.

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Google stock’s early chart action was shaped by a notable technical setup followed by a strong run-up from the stock’s IPO base. Shares surged 78% in less than two months following the IPO base breakout before forming more bases that led to an even bigger move.

“That’s unusual to get that big a run out of the IPO base, but this is the granddaddy and the one to study,” trader Greg Morton told Investor’s Business Daily’s “Investing with IBD” podcast.

Audio Version Of Podcast

Learning From Google Stock’s Debut

Following Google’s successful advance from its IPO in late 2004, IBD’s Mike Webster did an exhaustive study of every IPO since 1963. Using the similarities he found from the study, he developed IBD’s “IPO Base.”

When Google stock made its debut, shares developed a shallow IPO base pattern that formed over three weeks. But not all bases are built equally. The depth of Google’s base was less than 15% and symmetrical. Volume was ideal. It declined as the base bottomed and picked up again on the right side of the base.

Google stock also had an up/down volume ratio of 3.6, which rose to 4.7 on the breakout, a “super strong, super rare” occurrence not typically seen in other IPO stocks, Morton noted. The up/down volume ratio helps find stocks under accumulation, indicating institutional buying.

The stock broke out on days 17 and 18 of the base. The minimum number of days it takes an IPO base to form is typically 10 days, with some very rarely forming in just seven days.

Takeaways For Investing In Today’s IPO Stocks

Lessons from Google stock’s early performance can be used to help determine whether today’s IPO stocks exhibit key characteristics that make them worthwhile investments. These signs include a shallow base of no more than 15%, a strong up/down volume ratio of 1.5 or higher that rises over time and a symmetrical base that has passed enough time to be actionable.

While there’s no perfect basis for how an IPO performs, Morton says Google stock is as close as it gets. “That’s the one to study, the one I dream about, the one I go back and look at.”

_Follow Mike Juang on X at _@mikejuangnews and on Threads at @namedvillage.

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