A Drawdown Does Not Improve Alphabet's Earnings Gap Odds

Alphabet closed Friday at $346.77, about 13.9% below its 52-week closing high of $402.62. It reports on Wednesday, July 22.

Some believe a stock trading well below its highs into earnings has more room to run higher after earnings. We tested this across 77 GOOGL earnings reactions going back to 2007.

Share of Alphabet earnings reports that gapped up, by how far the stock sat below its 52-week closing high going in. 2007 to 2026.

Ten percent off the high changes nothing

Across all 77 reports, GOOGL gapped up 60% of the time.

When it was 10% or more below its 52-week closing high, it gapped up at the same 60% rate (15 of 25). The condition does not change the odds at all.

Twenty percent off, the odds get worse

Reporting from lower levels made the odds worse. When Google entered earnings while 20% from 52-week highs, it only gapped up 42% of the time. That is 18% below the baseline rate.

Every Alphabet earnings report made 20% or more below the 52-week closing high, 2007 to 2026. Prices are split adjusted. Highlighted rows gapped down. Six of the twelve fall in the 2008 to 2009 period, and three more in the 2022 selloff.

Report date	Below 52w high	Earnings gap
Jan 31, 2008	-23.93%	-6.31%
Apr 17, 2008	-39.40%	+19.06%
Jul 17, 2008	-28.09%	-6.58%
Oct 16, 2008	-52.41%	+7.35%
Jan 22, 2009	-48.48%	+0.90%
Apr 16, 2009	-34.65%	-0.70%
Jul 15, 2010	-21.18%	-5.04%
Apr 26, 2022	-20.81%	-3.52%
Jul 26, 2022	-29.91%	+4.04%
Oct 25, 2022	-30.27%	-7.70%
Feb 2, 2023	-27.20%	-4.46%
Apr 24, 2025	-22.82%	+3.64%

What does change is the size

Direction stays flat or worsens, but the gaps themselves get larger the further the stock has fallen. Average up gaps run +5.39% across all quarters, +6.34% from 10% below, and +7.00% from 20% below. Down gaps widen too, from -4.32% to -4.90%.

Distance is measured from the 52-week high of closing prices at the close before the report. The 20% group is a subset of the 10% group. Averages are taken within each direction.

Going into earnings	Reports	Gapped up	Avg gap up	Avg gap down
Any distance (baseline)	77	60%	+5.39%	-4.32%
10% or more below 52w high	25	60%	+6.34%	-4.25%
20% or more below 52w high	12	42%	+7.00%	-4.90%

A note on the sample

The 20% group holds 12 reports, and they are not spread evenly. Six fall in 2008 and 2009 and three more in the 2022 selloff, so the group is closer to three market episodes than to twelve independent readings.

Treat the 42% as evidence that a deep drawdown has not helped, rather than as a rate to lean on.

Alphabet goes into Wednesday about 14% below its high, inside the 10% group and outside the 20% group.