Assuming you didn’t overshoot your future exit on the space-time continuum and end up in purgatory, a time machine is the easiest path to wealth.
20/20 hindsight being what it is, bitcoin, ethereum, the internet boom and bust, the housing market rise and crash look fairly evident. Yet, some people saw these coming ahead of time, and amassed fortunes. So, let’s try to anticipate a potential acquisition that might send a stock price soaring.Home robotics maker IRobot most famous for the Roomba vaccuum for years enjoyed first mover advantage. Today they face not only increasing competition from electronics heavyweights Samsung and LG, as well as lower end supplier Shark Ninja, but the mere rumor of the Dread Pirate Bezos and raising his feared Amazon flag into the space sent IRobot’s stock into a nose dive. Not even a positive earnings report and raised guidance were enough for the stock to recover from the Amazon shockwave left behind.
Yet, the fundamentals of the space remain strong as consumers increasingly adopt robots into their homes. The emerging trend is for robots and AI to become more and more woven into the fabric of lives, and, while IRobot isn’t a cheap stock valuation wise (at 32 times earnings) it is poised for continued growth.
But let’s take a look into our crystal ball and see why Amazon wants to go to the trouble of creating robots for the home (code name Vesta.)
The answer: for the same reason they created Alexa. They not only want into your home, they want to know everything about you, Amazon wants the data on every single person on earth, so they can sell them everything that they might not even know they need. (if this isn’t the case, it doesn’t make a lot of sense to expend resources on this project)
A Google executive famously once said, “We don’t have the best search algorithms, we just have the most data.” It’s a race for your data, and it’s why Facebook and Google have built such enormous empires “giving away” a free product.
It’s why Google and Amazon battle it out on the personal assistant front (Alexa and Google Home) with the hardware selling at a loss; your data is incredibly valuable.
So, now that Amazon is rumored to be creating a new line of home robots, guess who should take not only take notice, but action. Mighty Google of course.
Google has made a robotic acquisition before- Boston Dynamics. It was expensive, and apparently unfruitful, and they sold it to Softbank,which might temper the company’s appetite for our Roomba maker …
But on the other hand, allowing Amazon to increasingly penetrate our homes and grab all the coveted data, is almost certainly at odds with Big G’s strategic efforts. Additionally, IRobot is already a trusted friend in many homes. (People have names for their Roomba, and stories of loyalty to the machines abound.) The company is also profitable, with good margins, and a world-wide presence which Google could further expand,
While the company’s current valuation of 1.6 billion doesn’t make it a small acquisition, it’s more than doable, and even if Google chooses not to, with the recent downside action to the mere rumor of the Dread Pirate Bezos being in waters nearby, IRobot is still the the industry leader.
Bottom line, our crystal ball says there is far more upside in IRobot stock than downside. Pick up a couple shares.