Alphabet's (GOOGL) big spending plans could be in for a legislative surprise if two key senators have anything to say about it.
Shares of the search leader are being sent higher in Monday morning trading in expectation of fourth-quarter earnings, which could be bolstered by the company's colossal cash pile.
Vermont Sen. Bernie Sanders, and Sen. Chuck Schumer, the Democratic Minority Leader from New York, could be key figures standing in the way of this catalyst.
"If [Alphabet executives] talk about how they're going to buy back a lot of stock because they have a lot of cash, with the Schumer and Sanders notwithstanding, then you'll want to buy the stock," Action Alerts PLUS portfolio manager Jim Cramer said on Monday morning.
However, while it is easier to push aside the comments from the senior senators as bluster, the legislative risk added in just before the cash-rich company posts its fourth-quarter results on Monday evening does indeed add another question mark to the hotly anticipated report.
"Our legislation would set minimum requirements for corporate investment in workers and the long-term strength of the company as a precondition for a corporation entering into a share buyback plan," an Op-Ed from senators Schumer and Sanders reads. "The goal is to curtail the overreliance on buybacks while also incentivizing the productive investment of corporate capital."
The piece in The New York Times calls companies such as Walmart (WMT) , Harley-Davidson (HOG) , and Wells Fargo (WFC) out by name, adding to the fine-point focus of legislation on America's largest companies.
The proposed legislation will also attack dividend payments, according to the article.
The action could cause hesitation from Alphabet executives to meet the expectation of increased share repurchases on Wall Street.
"We believe GOOGL could soon announce a sharply higher stock buyback authorization of $12-15 billion - up from $8.6 billion in Jan. '18," Jefferies analyst Brent Thill speculated prior to the comments from Sanders and Schumer.
He noted that the buyback program has steadily increased since its 2015 inception and 2019 could be a key year to use buybacks to buoy shares. If a block on buybacks is put forward, that thesis could be taken out of the equation.
To be sure, Alphabet is more insulated than either Walmart or Harley-Davidson given the higher pay-rate for software employees, a key focus of Schumer and Sanders.
According to Glassdoor, even interns at the Mountain View, Calif.-based company make almost $7,000 per month on average, nearly tripling the $15 an hour request furthered by the article when converted to hourly wages.
The editorial goes on to focus on a company's duty to its labor force.
While Google certainly does not have a history of layoffs, aside from major cuts to its broadband provision division Google Fiber, some have blamed it for promoting layoffs in tangential sectors, especially journalism.
"The biggest threats to journalism right now are tech monopolies and concentration of ownership," Rep. Alexandria Ocasio-Cortez said on Twitter. "Healthy democracy requires high-quality journalism. Without a range of independent outlets and the revenue to sustain them, our democracy will continue to crumble."
Comments, if offered on the proposed legislative action, could be an interesting thread to watch for the politically conscious company.
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