ADT stock set a new intraday record on Monday after Alphabet‘s (GOOGL) Google said it would invest in and partner with the home-security provider to develop new smart-home security products.
Under the deal, Google will invest $450 million for a 6.6% ownership stake in ADT (ADT). The companies will each put up $150 million for marketing, product development, technology and training.
Google will make the $450 million investment in exchange for a new Class B share that has all the rights of ADT’s common stock except for the right to vote on directors. Google’s investment in ADT stock is expected to close in the third quarter. The extra $150 million is subject to certain milestones.
The partnership will blend ADT’s security services with Nest, Google’s connected-home system. ADT said it plans to start offering some Google devices to customers this year.
The companies said they expected the integrated product would “advance smart home offerings and attract new consumers seeking premium technology, end-to-end smart home service and trusted security.”
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ADT Stock Ratings
After soaring more than 100% earlier, ADT stock pared gains and closed up 56.6% at 13.48 in the stock market today. Shares are well beyond buy range after clearing a cup-with-handle base last week. Alarm.com (ALRM), one of ADT’s rivals, plunged 17%.
Despite Monday’s move higher, ADT stock has a mediocre 72 Composite Rating. Its EPS Rating is a weak 12.
On Friday, the stock was still within range of an 8.69 buy point of a cup-with-handle base. Before Monday, the stock’s relative strength line had moved sideways for the past two months, indicating a mostly in-line performance with the S&P 500.
Big tech companies over the past few years have deepened their investments in connected homes and home-security systems. Amazon (AMZN), which bought the smart-home tech company Ring in 2018, was down 1%. The online retailer had invested in Ring before the acquisition.
Alphabet stock dipped 0.35% and is extended from a 1415.63 buy point of a cup-with-handle base. Shares have a 90 Composite Rating. IBD generally encourages investors to look at stocks with a Composite Rating of 90 or higher.
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