Ben Kriegsman

About the Author Ben Kriegsman

Benjamin is currently a student at the University of Michigan in Ann Arbor studying Economics. Originally from Los Angeles, Benjamin has a passion for public markets and when he isn't trading, can be found immersing himself in the world of Music and Art.

How the Brexit Affected Alphabet Inc (GOOGL), International Business Machines Corp. (IBM), and American Airlines Group Inc (AAL)

Bye-bye, Britain! Friday marked a historical day for the world as UK voters opted to leave the EU, separating their allegiance from the 28-country union. While some argue that the vote marks a monumental success for British freedom, others blame British millennials for a hasty and uneducated divorce from stability. However, one thing is for certain – a lot of people lost money last week. Let’s take a look at what effect the vote had on Alphabet Inc (NASDAQ:GOOGL), International Business Machines Corp. (NYSE:IBM), and American Airlines Group Inc (NASDAQ:AAL).

Alphabet Inc

In the wake of the Brexit vote, tech giants commiserated over falling share prices as generalized uncertainty ruled the market. Alphabet, Google’s parent company, was down more than 4% at market close on Friday. Alphabet is estimated to derive around 30% of its revenues from Europe, the Middle East, and Africa, according to analysts. Estimates point to the UK as the driving force behind 10% of that segment.

TipRanks statistics shows GOOGL dipping 4.15% to $685.20 a share following the news of the Brexit. The stock is still considered to be a Strong Buy with 97% of analysts maintaining a Buy rating and the remaining 3% endorsing a Hold rating on the stock. The consensus target price for GOOGL is $911.27, marking a 33% upside from current prices.

International Business Machines Corp.

Another tech stock feeling the burn of the Brexit is IBM, which fell 5.64% on Friday. In the past, IBM had advocated against a British exit claiming that a secession from the EU would hike up unemployment and put the economy at severe risk. IBM’s UK Chief, David Stokes, stated before the vote in April 2016, “IBM is in favor of the UK remaining a member of a reformed EU… As a large, globally integrated business with a strong presence across the European Union, IBM sees significant benefits from EU economic integration.”

With TipRanks displaying an average target price of $145.81, IBM may not be the best bet following the Brexit, as this consensus actually marks a 0.53% downside from current share prices.

American Airlines Group Inc

Among the most impacted by the Brexit vote, however, were travel and leisure stocks. American Airlines saw a sharp decline in share prices because of the Brexit. According to analysts, American Airlines derives close to 10% of its total business from the UK. The airline also maintains a strong relationship with UK travel giant British Airways, as both airlines are part of the Oneworld airline alliance and share revenues on trans-Atlantic flights.

Friday’s dip caused AAL shareholders grief with a steep 10.81% decline in stock price. But don’t let Friday’s capital flight force you to belittle the company quite yet. AAL is still rated as a Moderate Buy, with 63% of analysts maintaining a Buy Rating on the stock, 25% iterating a Hold rating, and only 12% upholding a Sell rating. This drop in price could be a potentially attractive entry point for investors as a consensus price target of $46.75 is in place, marking a 73% upside according to TipRanks.

Looking forward, nearly 3 million signatures have been gathered petitioning for a re-vote on the EU referendum. This petition has already gathered more signatures and more traffic than any other parliamentary website, but the actual likelihood of a rerun taking place is still highly questionable. With the resignation of David Cameron already in effect, bringing his 6-year premiership to an end, investors are all left chanting in unison, “God Save the Market.”

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