breaking news…Fitbit acquired by GOOGLE

breaking news…Fitbit acquired by GOOGLE

hey everybody happy Friday and welcome back to the channel I hope you had a great Halloween now let’s dive into business here can you name three companies that alphabet owns jump down in the comment section real quick show me your skills but no googling ok so I asked myself this question this morning and I couldn’t answer it I could only come up with the names of two companies that alpha bonds so in today’s episode I’m gonna give you the latest addition to the alphabet family that was just announced this morning as well as break down the entire family tree of alphabet here we go so Google’s parent company alphabet is acquiring the health tracking company Fitbit ticker symbol fi T clever for 2.1 billion dollars now this deal is going to pay out about 7.30 5 cents per share for fitbit stock which happened to be trading at about six dollars and 16 cents per share this morning in the pre market activities now let’s quickly jump to the charts and let’s take a look at the price action related to this announcement this morning okay I’ve got Fitbit right here up on the charts on the daily timeframe ticker symbol fi t over here and you can see we’ve got the old rocket just popping off the top here so what I want to do real quick is just zoom out so you can see Fitbit and how bad things have been since its highs of 51 90 back in August of 2015 so an IPO up and then it’s just been in this falling madness ever since with a little blip in here in June of 2018 and then it continued to just roll on downhill so it’s been struggling as you can see on all these earnings announcements down here a lot of them are negative that they weren’t making any money so we’ve tracked all the way out and then we started to get some talks about Google about alphabet and how alphabet who is the parent company to Google was looking to acquire Fitbit so when that was announced this morning the news broke and as you can see anyone holding Fitbit shares is probably really excited right now because we’re currently trading at 714 a share we were at a highest 726 a share this morning and now you might be asking yourself well now is Fitbit a Buy should I buy Fitbit is this going to be a huge thing with alphabet gobbling it up and I think the answer altom Utley is yes it is a big deal for Fitbit and we’ll get into that a little more here in a minute but I wanted to just show you that you know once we get that pop and we’re up here now if we get in now we would just be chasing this is overextended now we have to wait for a pullback if we look at the MACD you can see we’re really green on the upside we need to get that expansion to the downside before we revert to the mean and head back to the north side so what I’m gonna be waiting for on this to be watching Fitbit is I want to see Fitbit come settle back down and conveniently enough we’ve got this green line here which is the 200 simple moving average we’ve got the blue line which is the 20 simple moving average and then as you all know the red one is the 50 simple moving average now as you can see with this price activity pushing up and the next few days being up here these lines are going to all kind of converge and I’m gonna be looking for VIPs for Fitbit to drop back down into that $5 area if we get back in that 5 550 area that’s gonna be really appealing in my opinion to start gobbling up a few shares because this is huge news alphabet they have capital they can infuse Fitbit with the money they need to make all their dreams come true so I think that this could be a very interesting buy going forward being that Fitbit doesn’t have debt and we’ll talk about that a little later as well but this is a very good sign for Fitbit and its shareholders and the other very interesting thing is on November 6th we’re gonna get earnings so we’re gonna see what happens here what their earnings are we’ll see what that does to this price action and then we’ll make decisions moving forward from there but right now I’m really excited about what’s happening with Fitbit with this acquisition now if we flip over real quick and we look at alphabet and I’m gonna turn on the pre-market hours as well so this caused a gap up in alphabet as well but then you can see after it topped out around 12 70s 12 71 it’s then sort of sold back off so not as huge in effect obviously on alphabet which is pretty typical the company that does the acquiring doesn’t typically get the biggest boost it’s usually the company that’s being gobbled up there it gets the run up in price because they declare a purchase price per share for the company which in this case is over $7 per share for Fitbit so we’ll keep an eye on this and we’re gonna be looking for a pullback into a support area along these moving averages before going higher so with that let’s jump back in let’s talk some more news so alphabet has struggled to gain much traction in the growing wearables market and this acquisition will give it a significant leg up not to mention the additional resources of alphabet will help bolster fitbit’s development and production of amazing wearables now Google was one of the first big-name players to jump into the SmartWatch space with its Android wear operating system and since this time they’ve rebranded this wearable system to wear OS but market shares been very very small so far now users of wear OS saw its global share of the SmartWatch market fall while Fitbit get this saw its share rise from 3.7 percent in q1 of 2018 to 5.5 percent in q1 of 2019 now one thing a lot of people don’t realize is Fitbit has been steadily pushing into the software market and has inked some exciting deals with insurance providers to help subscribers improve their health and recently announced a partnership with bristol-myers Squibb and Pfizer to develop technologies to detect atrial fibrillation which is a heart condition within its users in August Fitbit debuted its Fitbit premium service how many times can I say Fitbit in August Fitbit debuted its Fitbit premium subscription service and I’m apologizing for saying Fitbit so many times in this video which provides subscribers with customized fitness and health guides based on their goals this is all available for about $9.99 per month or 70 9.99 for a full year and Fitbit premium is being positioned as a key differentiator for the company compared to you-know-who Apple which doesn’t offer such a custom service so now let’s quickly talk about alphabet and dissect the family tree so you have a better understanding of what alphabet owns what falls underneath it and you can check your answers to the question I asked in the intro so let’s take a look at this graphic here so what you see here is the family tree for alphabet moving from left to right you can see alphabet owns calla cult nest which is the home smart solutions for adjusting temperature with your smartphone you have Sidewalk GV we have X which is secretive moonshots jigsaw verily deep mind which is their AI research way mo self-driving cars then they have a capital section and access and energy now and which and under access and energy it’s interesting you see Google Fiber there which is wild now underneath alphabet if you look right in the middle of your graphic you’ll see there’s Google now Google is underneath alphabet but Google has its own tier of pieces that fall underneath if it starting from the left it’s got Google Ads it’s got the Google Cloud YouTube where we are right now they own Android Google oversees Android which a lot of people don’t realize then they have hardware such as pixel and chromecast and then they have an infrastructure piece underneath of googles so this is the entire family tree which is really really big for alphabet but if you think of it in as in two tiers alphabet being the main player and then Google being a subsidiary or a smaller second tier underneath that has pieces underneath it it’s kind of easier to keep track of it in your head so this is the full layout for alphabet now what I want to also jump into is I want to go into the TD Ameritrade platform here and I brought Fitbit up ticker fi T and I just want to show you a couple of things about the fundamental that have me excited as well on Fitbit there’s Fitbit one more time for you if we go to fundamentals and we pop over here to the balance sheet one thing that’s very interesting to me is you can see their cash and short-term investments from 2014 and this is in millions 196 million it jumped to 664 and 2015 then we bumped to 706 and 2016 679 and 2017 and 723 and 2018 so this is the highest level of cash and short-term investments that Fitbit has ever had and this was as of the end of 2018 so that’s very bullish in my opinion especially with the acquisition with alphabet picking them up and then if we come down here and we look down at the liabilities I always like and you guys know I always like to go to total debt I like to see what’s going on and you can see back in 2014 148 million in debt but then moving forward they eliminated all of their debt and now they have a debt level of zero so that makes me very excited for Fitbit because there’s kind of starting in a clean spot they had a pretty good balance sheet to start off and now they’re being bought by alphabet who’s gonna be infusing cash into their system which is gonna make things all the better for Fitbit and their development now if I flip over to the quarter that was annual if I go to the quarter and we look at their debt you can see right here for the quarter – of 2019 that they held from quarter one two million dollars of debt but if we come up here and we take a look at their cash and short-term investments quarter-over-quarter you can see they’re holding a massive amount of cash and short-term investments relative to their debt so 565 million in cash short-term investments you could call it three hundred three hundred and thirty five million in cash and two million in debt this past quarter which was carried over from quarter one so very good on the balance sheet which has me very excited about this whole situation for Fitbit so drop down in the comments below let me know what you think of this let me know if Fitbit is interesting to you for a long position anytime soon and why would you buy it and at what price level would you consider jumping in have a great weekend everyone hope you were green today and we’ll see you next week [Music]


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