Google Acquires Data Analytics Firm Lookers For $2.60bln.

Google Acquires Data Analytics Firm Lookers For $2.60bln.
June 7, 2019


The stock of Alphabet Inc. (Nasdaq: GOOG) has gained $2.12 or $0.20 to close at $1,044.34 after the company disclosed the decision to acquire Looker, a data and analytics software company in an all-cash deal worth $2.60 billion. It would become the fourth largest acquisition in the history of Google. Alphabet shares have lost over 12% in the past month over worries that the US regulations may scrutinize the firm for adopting strategies to eliminate competition.

The acquisition of Looker would be Google’s first significant deal in enterprise business after Thomas Kurian, the former executive of Oracle Corp., took the helm of Google Cloud division in February 2019. Looker offers business analytics software, and characteristics of its business are similar to publicly traded firms such as Tableau Software Inc. (DATA) and Splunk Inc. (SPLK).

Regarding Looker’s technology, Maribel Lopez, principal analyst at Lopez Research, said that it is “a layer above crunching data.” Lopez further elaborated saying that clients of Looker will transmit their data to Google Cloud to be analyzed. However, they still require tools that permit them to explain benchmarks like revenue or send the data back to a platform like Inc. (CRM) after finishing the analytics. Looker assists in completing these operations.

Google has permitted firms to select between its proprietary tools and the ones offered by other firms to perform various analytics task on the cloud. However, the company desires that clients do perform much of their operations in the Google Cloud. That is the reason for continuously looking at options to include new tool kits like Looker, in addition to the existing owned ones.

Regarding the acquisition, Lopez said, “I think you’re going to see everyone go up the stack. No one wants to just be a data cruncher because that’s perceived as something where it’s easy to move from one to another.”

Lopez argued that it’s an encouraging sign that Google made this significant acquisition early in Kurian’s tenure, which shows that the company is receptive to his vision. Looker was valued at $1.6 billion through a private funding round in late 2018, according to TechCrunch, which reported that the company had recently crossed a $100 million revenue run rate and was growing the top line at 70% on a year-over-year basis. Google was an investor in a 2017 funding round for Looker via its CapitalG investment fund.

Lopez maintained that Google acquisition is inspiring because the big-ticket purchase has happened soon after Kurian took over, signaling that the company is willing to back his strategy.

Looker was estimated to be worth $1.6 billion during the seed funding phase that took place in the final leg of 2018. According to TechCrunch, the firm had lately achieved a revenue run rate of $100 million, while improving the top line at 70% on a y-o-y basis. In a startup financing round conducted in 2017, Google invested in Looker via its CapitalG investment fund.

Google anticipates bringing Looker within the folds of the Cloud unit and utilizing the firm’s technology to improve its “multi-cloud strategy,” which Kurian debated at a Google Cloud seminar in April.

The acquisition deal, anticipated to be completed by the end of 2019, would seal Google’s first 10-figure take over since it completed a $1.10 billion purchase of HTC’s Pixel team in 2017.

Only three acquisitions made by Google so far, namely the $12.5 billion takeover of Motorola Mobility, the $3.2 billion acquisition of smart-thermostat company Nest Labs, and the $3.1 billion purchase of ad company DoubleClick, are considered to be larger than the addition of Looker.

Regarding the acquisition, Aaron Kessler, an analyst at Raymond James, said, “An acquisition was a matter of when, not if. With Looker out of the way, the question turns to ‘What else is on GCP’s shopping list?’”

The acquisition is anticipated to turn the stock bullish in the near-term.

Technically, the stock of Google is trading near its major support at 1000. Furthermore, the stochastic RSI is in the oversold region. As a result, we can expect the stock to reverse trend and start moving upwards in the days to come.

goog - technical analysis - 7th June 2019

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Andrew Wright

Prior to founding in 2014, Andrew worked as a proprietary trader, then as a market maker. As a market maker, he traded options in over 100 stocks, he then began trading currency pairs in 2013. Andrew still actively trades both, and prides himself on educating and informing traders on the benefits of both Binary Options and Forex.

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