Google Shares Up for Grabs
Shambo is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Google (NASDAQ: GOOG), the No. 1 search engine, recently announced its plan to launch a new credit card aimed at small businesses in the United Kingdom. Google also expressed its interest to enter the US market.
Google has collaborated with Barclaycard, in the Uk and Comenity Capital Bank in the US to issue the cards (both of which happen to be from MasterCard).
The purpose is to provide investors a way to pay for spending on advertising through its AdWords program by means of a credit card. Google advertisers will be eligible for monthly credits ranging from $200 to $100,000 to pay for Adwords (which are the messages that pop up next to user searches).
Google said it set its initial interest rates considerably lower than prevailing market rates on credit cards for small and medium-sized businesses (with an 8.99 percent rate in the US and 11.9 percent in the UK).
But Google isn't the first of its kind to enter into the banking sector. Its biggest rival, Amazon.com (NASDAQ: AMZN), the No. 1 e-retailer, said that it would provide loans to advertisers who would sell their products online in their marketplace. The strategy devised by Amazon is known as Amazon Lending according to which, it is lending up to $8,00,000 to some merchants based on their performance in the company’s online marketplace. With this step, Amazon has announced its entry into aggressive finance marketing.
The move marks the opening of a new front in the battle between the biggest Internet giants, as they turn to their balance sheets as a source of competitive advantage. Only time would tell as to which of the two would emerge as the winner of the combat.
How About the Stock?
Ever since the announcement of the Adwords Business Credit card, Google's stock has followed an upward curve. With this agressive marketing strategy, I expect Google to outperform going forward. While the purpose of Google’s credit card is very specific, the step marks the foray of Google into new ventures outside of its core operations. It simply adds another feather to its already illustrious cap.
So if you're an investor looking at smart investments, go and grab Google shares at the earliest opportunity.
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