In Focus: Google & FedEx
Thanks for checking out this week's In Focus, our look into a company, companies, or markets that made the Wall Street news cycle. This week we bring Google and FedEx in focus.
Google Enters Gaming This week Google (GOOGL) announced Stadia, it's live streaming video game service. From the demo it looks great, but... I've said it in these In Focus writings before, I grew up a gamer, I still consider myself a gamer, just with too little time to play. I've seen many companies enter the video game industry with grand plans only to fail out a year or two later. The gamer maybe the hardest demographic to impress, and though Google wowed people with the demo, how it works in real life and the price will tell the tale.
The Captain of the Ship There is big money in gaming and Google know's it. Fortnite has been a money printing machine for Epic, and company see, company do on Wall Street. In short, I'm not betting that Stadia is going to be a big thing out of the gate, again gamers are hard to impress, but I believe Google is a BUY. My thought has been for several years that Google will win the artificial intelligence and machine learning race. AI/ML is a software issue and Google is the best software company in the game, don't @ me! Seriously, I've witnessed Google take and eat Microsoft's lunch, Google is the captain of the ship.
Digital Advertising's Top Dog
Besides the AI/ML race, Google is still the top dog when it comes to digital advertising. I read a tweet from an advertising person that I follow that suggested that $0.75 of every digital advertising dollar will go to Google and Facebook (FB). Now this chart suggests that Amazon (AMZN) is coming and Google will lose digital advertising market share; and even with that I find Google to be undervalued. If you ever have time, look at the Alphabet Investors Relation page, they are working on a lot of things, Stadia is just one of them, there is also Waymo and a bunch more. My thoughts continue to be that Google has such a large marketshare of the digital advertising space that it can slowly develop other things like AI/ML, self driving vehicles, or game streaming and still be more than okay. Google is a Buy. An invested dollar in Google may be the most diversely invested dollar outside of Berkshire Hathaway.
A Global Economic Slowdown and Missed Earnings
FedEx (FDX) reported earnings this week, missing earning per share expectations by $0.07 and revenue estimates by $700 million. The company blamed slowing macro economic conditions and weaker global trade growth trends for the miss.
This is concerning because when the market dropped in Q4 2018, I believed, and a few other believed it was the slowing global economy that CEOs had warned us about back in summer 2018. But then we hit 2019 and the markets started rising again. I knew the global economy hadn't been fixed, but stocks were moving up. Were the market's just that resilient or where the CEO warnings from summer 2018 overblown?
Amazon at it Again For the second time in this week's In Focus Amazon is coming to take marketshare, in this case it's from UPS (UPS) and FedEX. Both companies have been pretty good about down playing Amazon's entrance into the shipping and logistics industry. Hell, I've even down played it, believing Amazon's threats of getting into shipping was a way to negotiate better shipping rates with FedEx and UPS. But it looks like Amazon is for real and this is bad news for FedEx.
The stock is at that level where many people will see value based on the numbers, but the threats the company faces are enough to make me back off. FedEx is an AVOID, assuming you haven't sold it yet. FedEx traded at $272 per share in January 2018. The company has faced a lot of issues over the past year and I assume they will be facing more. FedEx is an AVOID.
This is where I leave you with a BUY on Google and an AVOID on FedEx. Thanks for checking out In Focus, may your next investment be your best investment.