Watch Out for GOOG Stock
Alphabet Inc (NASDAQ:GOOG), the titan formerly known only as Google Inc, has eclipsed all other companies in my mind. It’s safe to say that I’m perennially bullish on GOOG stock, but right now, I’m really excited to see it trading at a discount.
Long ago, Google became an embedded feature in most of our lives. We barely notice how often we use one of its features, from its landmark search function to its “Android” mobile operating system (OS) on one of the gazillion smartphones out there.
It’s constantly in the background.
In fact, Google is now so seamlessly integrated into our lives that we barely notice when the company does wildly unexpected things. They keep launching new products, while executing flawlessly and at a sufficiently large enough scale to keep prices low.
Let me give you an example from the very recent past. It’s a perfect example of why Google stock has outperformed the stock market in recent years.
Google Conquers the Household
With so many television programs moving online, to sites like Netflix, Inc., other technology firms are trying to get a piece of the action. Apple Inc. and Amazon.com, Inc. both launched their own streaming services, but Google chose not to.
The company stayed out of the fray and went for hardware instead. Alphabet realized that many people didn’t have smart TVs on which to stream these shows, nor would they rush out to buy a “Google TV.” The solution needed to be simple and affordable.
This was the chance to corner an underserved part of the market. The brilliant folks over at Google converted that insight to the “Google Chromecast,” a tiny HDMI device that plugs into almost any TV and connects it to the Internet. With Chromecast, any TV becomes a smart TV.
And it costs only $35.00, which is probably why it sold 52.7 million units in the third quarter of 2015. (Source: “Chromecast Domination: The Streamer Beats Out Roku, Apple TV in Q3,” Digital Trends, November 30, 2015.)
On a more anecdotal note, my girlfriend currently lives in Montreal, where she spent the last two weeks trying to get her hands on a Chromecast. I say “trying” to get one, because it’s been consistently sold out. They’re simply flying off the shelves.
It wasn’t until we met in Toronto that she was able to find one and even then, it was the last one available. Soon after, when visiting my parents’ house, I was shocked to see that they have one, too.
They already had a smart TV in the basement, but a Chromecast came in handy for a second, smaller TV upstairs. I guess at $35.00 a pop, there are tons of ways to justify making that purchase. Like I said, produce at scale and make it affordable; that’s the Google way.
GOOG Stock Forecast for 2016
Google has a habit of mass producing devices that don’t exactly reinvent the wheel…it’s more like they take its commercialization one step further. Some estimates peg the Chromecast’s market share as roughly equal to “Apple TV” and “Amazon Prime TV” combined. That’s a huge impact for such a young product.
So when I look at the Chromecast, I see a product that disrupted an entire wave of smart TVs and online streaming. This kind of sidestep, where Google plunges into a new industry, is what makes the company so special.
Now that the company is reorganized into Alphabet Inc, we’re only going to see more of these little adventures and it could mean huge things for anyone holding Google stock.