Google: The Bigger They Come, The Harder They Fall
by Paul Harrison, contributing writer
Google’s (GOOG) high point for 2011 so far came back in January, when their stock hit just below $640 a share. And in terms of being able to sidestep downtrends, nothing like have the SmartStops risk management service notify you on Jan. 21st at $616 that now may be the time to exit. And if you didn’t then, their risk alerts just kept firing. That’s why its important to have your exit or hedge protection methodology in place from the start. As now we’re sitting at around $518 a share! And things still aren’t looking good.
According to SmartStops , Google is still in a high risk state in boththe short term and the long term time horizons. In fact, Google has dropped over 12% in valuejust since the beginning of April.
Part of that is that Google has just been spending way too much money. Their spending affected their 1Q earnings report, and none of that spending is expected to bring any new money making consumer services to market soon. That explains their previous drops, but what about the future? Google Wallet was unveiled yesterday, backedby Citibank (C) and Mastercard (MA), but the digital wallet is a long ways awayfrom replacing people’s standard business card and picture stuffed wallet.
There are some serious drawbacks and limitations to theGoogle Wallet service. First, only the Google Nexus S phone on the Sprint (S)network comes equipped with the necessary NFC technology (which is not apopular phone at all). Next, the customer has to have a Mastercard branded Citibank debit or credit card. On top of that, only a handful of retailers nationallyare even technically capable of accepting NFC payments at this point. But thoseare just the issues with the actual service. There’s also expected to be some serious competition around the corner. Both Research in Motion (RIMM), Nokia (NOK), and Samsung all plan on implementing technology that would enable their phones to make NFC payments, and many people have speculated that Apple’s (AAPL) iPhone 5 will also include NFC technology.
But the competition for turning our smartphones into payment methods doesn’t stop there. Visa (V)recently invested in the disruptive mobile payment start-up Square (founded byJack Dorsey of Twitter), and is concurrently developing their own mobile wallet service.
Even without all this competition staring Google and their digital wallet in the face, the service may be unlikely to catch on immediately. First, payments are limited to $100, unless you go through extra steps to confirm the transaction. But one of the biggest things that could keep people from using it is the fact that it doesn’t completely replace wallets for people. Certain things like your ID, bus pass, employee ID, health insurancecard, etc., still need a home, and that home is likely to be the same walletthey live in now for at least the next few years. If you’re holding Google, Istrongly recommend using a service like SmartStops.net to monitor the situation.
If you’re looking to invest in the smartphone industry, butaren’t sure which team you’re rooting for, the First Trust NASDAQ CEA SmartphoneIndex Fund (FONE) is a great ETF that holds anything and everything that issmartphone related.