Let’s take a look at three big tech stocks— Alphabet (GOOGL), Apple (AAPL), and Fitbit (FIT)—to see what’s driving them right now. We’ll also see where these on-the-move tech stocks are headed and recap some recent analysis.
Google acquires Fitbit for approximately $2.1 billion
On November 1, Fitbit (FIT) announced it had into a definite agreement to be acquired by Google LLC (GOOGL). Under the terms of the deal, Google will pay $7.35 per share in cash. That number brings the total diluted equity value to about $2.1 billion. The acquisition share price represents a premium of about 20% as of October 31. And it’s about a double-digit premium to FIT’s share price before the buyout rumors.
This acquisition opens the door for Google to enter the wearables space, competing with Apple. Remember that Apple’s Wearables, Home, and Accessories segment recognized revenues of $6.5 billion, beating consensus estimates by approximately $500 million. Looking for more detailed Apple analysis? Check out Why Apple Stock Could Continue to Rise Post Q4.
Looking ahead, you’ll see it’s highly likely that Google will develop some wearable features that would be difficult to produce or market without Fitbit’s intellectual property. There’s a lot of space for tech stocks to grow in the wearables segment.
Fitbit CEO James Park said, “Google is an ideal partner to advance our mission. With Google’s resources and global platform, Fitbit will be able to accelerate innovation in the wearable’s category, scale faster, and make health even more accessible to everyone. I could not be more excited for what lies ahead.”
Is Google’s Fitbit acquisition a good idea?
The deal should close in 2020 with approval from both shareholders and regulators. And I think this is a good move for Google. Its entry into the wearable market presents new competition to Apple Watch. That competition may also cause some price adjustment for smartwatches, favoring consumers as well as tech stocks.
Following the announcement, Fitbit’s share price rocketed 15.53% in the last trading session. Meanwhile, GOOGL has risen 1.07%. In terms of technicals, it’s too late to buy Fitbit. Many technical indicators demonstrate “overbought” conditions.
More specifically, the company’s RSI score of 83.61 tells us that the stock is currently overbought. In addition, the stock stays well above the upper Bollinger Band line. The Money Flow index value exceeds the RSI index value, demonstrating overbought conditions as well. However, Google represents an attractive entry price level after recent sell-off. For a more detailed analysis of Alphabet, see Buy the Dip: Alphabet and Shopify’s Unwarranted Sell-Off.
More competition for tech stocks: Apple Pay catching up to PayPal
That’s not all that’s moving these tech stocks this week. On Apple’s latest earnings call, CEO Tim Cook said. “For Apple Pay, revenue and transactions more than doubled year-over-year with over 3 billion transactions in the September quarter exceeding PayPal’s number of transactions and growing four times as fast.”
According to Apple Insider, Apple Pay’s revenue and transactions more than doubled in the fourth quarter, reaching $3 billion. And according to the data from eMarkets, Apple Pay users in the US have increased by 8.1 million or 37.7% over the past year. Meanwhile, Google Pay users have grown by 1.1 million or 9.9%. Samsung Pay users have risen 9%.
And, again per eMarkets research, Apple Pay users could grow to 27.5 million. That forecast means seven to nine times faster growth than rival tech stocks Google and Samsung.
Apple’s stock price continue to climb. Better-than-expected Q4 earnings are driving AAPL. Also, the stock reached a new 52-week high of $255.93, closing Friday’s trading session up 2.84 % at $255.82.
Moreover, a lot of analysts boosted their price targets for Apple stock. On Thursday, Cowen increased its price target to $290 from $250. Cowen analyst Krish Sankar reiterated his “outperform” rating for AAPL. The analyst cited optimism around a low-cost iPhone SE2 in the first half of 2020 and a 5G model by late 2020. He also mentioned robust Service segment trends. UBS Group also increased its target price for Apple stock to $280 on Thursday.
Out of the 40 analysts covering Apple, 23 recommend it as a “buy” and 14 recommend it as “hold.” Only three analysts recommend selling Apple shares. See MarketBeat for a detailed breakdown.