This article was first published on iknowfirst.com, written by I Know First Research
Google Stock Forecast
Why bother to meticulously financially analyze Google (GOOG) to predict their future stock movement or financial results? Just look at their products. Google’s core products, by nature, keep on growing and developing and are highly addictive. Their products and services, particularly Google Search and YouTube, are cleverly designed to have no expiry date and their usage will not fluctuate due to market trends, financial crises and latest fashion tendencies. Due to this they will constantly accrue profitable revenues for a very long time to come.
Google Search is without a doubt the dominating search engine in the world and has become an integral part of our lives. Google.com is the most popular website on the planet and fifteen out of the top hundred websites visited is a google search website. It has become conventional practice throughout the world to “google” our questions and seek out information and services. Upon learning how to use the internet, every child is taught how to “google” any information which they seek. By contrast, very few people use Yahoo! and Bing as a verb – particularly in the younger generation. Upon release of its fast streaming search results feature, Google Instant, back in 2010, Google’s cofounder Sergey Brin explained that he wants Google to become, “the third half of your brain”. The fact that we now naturally “google” any bit of information we require and google search is able to predict what we want to do on the web means that Brin has effectively achieved his goal.
Google Search’s fantastic success has led to the company shaming rival search engine’s market share and currently amass 72% of global searches.
(Figure 1: www.netmarketshare.com)
In 2014, a staggering two trillion google searches were carried out throughout the year, an average of six billion every day, over two trillion throughout the year, over four million per hour and 70,000 google searches every second.
The internet plays, and always will play, a vital role in our world and Google Search’s fantastic and irreplaceable service will always be to the internet what the sand is to the beach – the internet can function as a separate entity without Google Search but it simply will not be the same. Google Search, by nature, has an unlimited customer base, its service is not restricted by time or trends, and in comparison to the revenue it accrues it demands very little human or financial resources to upkeep.
Way back in 2006, Google purchased video-sharing website YouTube for a bargain price worth just $1.65billion in stock. It has since grown immeasurably to the third most popular website in the world – after google.com and Facebook (FB). Like google search, YouTube has become an integral part of our lives and it is a product that as a result of the unrivalled phenomenal service it provides, can only become more useful in the future and will continue to dominate the internet.
YouTube has literally billions of users who watch the equivalent of hundreds of millions of hours of YouTube videos every day. More importantly, the number of hours users spent watching YouTube footage each month is up 50% year and year and mobile revenue on YouTube is up over 100% year on year too.
YouTube is addictive for users, vital for firms to advertise on and has grown into one of the world’s leading industries. By nature, it is a product that can only grow and become better, bigger and more useful tool. YouTube has no serious competitor, it offers a service that has no expiry date and which anyone in the world with an internet connection can use. It is therefore one of Google’s greatest current and future assets.
Users do not continue to utilise Google products our of brand royalty but rather out of an addictive necessity. In his book, “Hooked: How to Build Habit-Forming Products”, Nir Eyal explains how tech-companies find that their economic value is a “function of the strength of the habits they create” rather than the products themselves. Google is an incredibly habit-forming product and its services are used with little or no conscious thought. It has no need to advertise its products as once its users have experienced their service a couple of times they habitually continue to use them.
Their diverse products, whether Gmail, Drive, Hangouts or Google Wallets etc., are mostly designed to entice a customer use their service just once out of interest and after that they continue to use their products out of necessity or habit. If there is strong competition for their product or service, like when Waze began taking a lot of market share from Google Maps, then they simply buy them out. Indeed, Google has purchased nearly two hundred companies since 2001 in order to maintain their dominance of the internet, applications and tech markets.
Google Now, introduced in 2012, is essentially a personal assistance service run on android operated smartphones. During their developers’ conference in May, Google demonstrated how Google Now can alert an owner of a rented car to an airport gas station upon returning a vehicle and may need to fill up the tank. Google can evaluate the return time from emails displaying the traveller’s itinerary and real-time departure data provided by airports. However creepy and ethically incorrect that may sound, it certainly illustrates the way Google has successfully been integrated into almost every aspect of our lives.
Not all of Google’s products have been a resounding success. Relative to Google’s phenomenal success rate, products like Google Plus and Google Glass did not achieve the revolutionary effect that Google have been famed for. Google’s vast amount of resources, streams of revenue and continuous attempts to innovate their products means that despite not all of their products turning into gold, Google is the most powerful and influential company in the world and will be for a long time to come.
Apple (AAPL) is undoubtedly the most valuable company in the world and its market is over $200bn greater then Google’s, but, I believe, in the years ahead Google will take that title form them. Apple’s products are of really high quality and the company is perhaps the most respected and endeared in the world, but their products can only accrue a limited amount of revenue and are restricted by time, trends and personal finances. The iPhone does not dominate the smartphone market in the same manner that Google dominates the internet and will ultimately lose its trendy appeal.
(Figure 2: www.talkandroid.com)
Consumers utilise Apple’s products out of desire and out of love of their products but not necessarily out of necessity, which consequently means their products have an expiry date. By contrast, Google’s customer largely use their products due to the service it provides and has become so greatly engrained in the manner we function and conduct our lives that we feel compelled to use it. Additionally, their products are free to anyone with internet access, its opportunities for revenue are more or less limitless and it is not chronologically challenged – thus making Google a safer long-term investment.
I Know First supplies financial services, mainly through stock forecasts via their predictive algorithm. The algorithm incorporates a 15-year database, and utilizes it to predict the flow of money across 2000 markets. The self-learning algorithm uses artificial intelligence, predictive models based on artificial neural networks, and genetic algorithms to predict money movements within various markets.
The algorithm produces a forecast with a signal and a predictability indicator. The signal is the number in the middle of the box. The predictability is the number at the bottom of the box. At the top, a specific asset is identified. This format is consistent across all predictions. The middle number is indicative of strength and direction, not a price target. The bottom number, the predictability, signifies a confidence level.
I Know First had success predicting Google’s stock prices in the past. Back in March, I Know First released a bullish article concerning GOOG stock. Since the, Google’s share price have increased by over 10%.
More recently, I Know First published a bullish article on Google on Seeking Alpha. Noting I Know First’s success in the past, it is worthwhile to see if the algorithm agrees with the bullish fundamental analysis of the company. The one month,three month and one year forecast is included below.
(Figure 1: GOOG forecast July 3oth)
The above forecast is the one of our most-recent forecast from July 30th 2015 and is for the 1-month period, 3 month period and the more long-term period of one year. The forecasts demonstrate that the algorithm predicts GOOG to have a bullish year ahead, with positive signal strengths of 12.49, 11.71 and 12.71 respectively. They have very strong predictability ratings of -0.26, 0.21 and -0.17 which demonstrates that Google’s shares are considered stable and non-volatile.
The algorithm correlates with the I Know First research team who believe that as a result of their products and services, Google is and always will be a fantastically safe investment.
Positive signal strength does not mean investors should automatically buy the stock. Dr. Roitman, who created the algorithm, created rules for entry for a stock such as Gilead Sciences. Using this trading strategy, an investor should buy a stock if the last 5 signal strength’s average is positive and if the last closing price is above the 5-day moving average price. When both of these conditions are met, it is a good time to initiate a position in the stock.
Google’s products have meritoriously made almost the entire world’s knowledge, information and entertainment available for everyone on the planet for free. It has also effectively, however sinister this may sound, made us highly addictive and reliant on their products.
This dependence and never ending compulsion making us constantly seeking titbits of information is cleverly summarised by the famous Australian author Liane Moriarty, she explains that, “Google is my best friend and my worst enemy. It’s fabulous for research, but then it becomes addictive. I’ll have a character eating an orange, and next thing I’m Googling types of oranges, I’m visiting chat rooms about oranges, I’m learning the history of the orange”. Google’s core products, Google Search, YouTube etc, provide a never ending flow of information and entertainment which entices our brains to seek more information and therefore correspondingly makes us use their products more.
Likewise, the internet is not going anywhere, it will only get bigger and play a greater part in our lives and Google’s dominance of the internet, smartphone and application markets will only increase accordingly. As their dominance becomes larger their revenue base – primarily advertisements – will expand further. Due to this, Google shares are perhaps the safest long-term asset to invest in.