Google and the October 21st Effect

So …. I was looking at Google trading volumes this week in light of the much-ballyhooed 30+-million shares coming out of IPO lockup. And I discovered something interesting: Google’s trading volumes went through a gestalt shift back on October 21st.

Here is the average daily trading volumes of GOOG around the date:

Date

Avg. vol.

Pre 10/21

5.6m

Post 10/21

17.1m

There has been a roughly 6.5-fold increase in Google trading volumes, and it has been consistent. Prior to 10/21 we had one trading day with more than 10-million shares traded; since 10/21 we have not had a single day with less than 10-million, and we have had five days with more than 20-million shares traded.

So what happened? Google’s Q3 earnings release, of course. In case you ever wondered how a positive earnings release changes fortunes for your company this is a perfect case in point: While causing a bump-up in share price is nice, it is only slightly more important than higher liquidity in your stock.

Put another way, If Google had not delivered these numbers then it would have taken 7 days of trading nothing but newly out-of-lockup stock to absorb the new equity; but since building higher volumes with a bang-up Q3 Google’s trading can absorb the new stock in less than one-third the time.

Related posts:

  1. Do I Hear Google $400?
  2. Google Results and Some Quick Analysis
  3. Google’s Offering to be Delayed?
  4. Google Contrarianism is Looking Better and Better
  5. Google Pops, Nay-sayers Don’t