Google (NASDAQ:GOOG) has been a safe haven for investors over the last several months, reaching an all-time high of $844.00 on March 6, 2013. For most investors, Google has been an exceptional cost-effective security since its inception in 2004. The stock began trading nine years ago at $85, and made a precipitous four-year run to the mid-$700 level by late 2007. As the economy dipped and the credit collapse became a reality, Google dipped below $300 - reaching a low of $247 per share, but since has rallied to inconceivable new heights.
The question remains: just how high can Google go? Launching numerous innovative projects every year, Google has been the king of modernization and ingenuity. Just as speculation can drive a stock price, so too can a new project to create deceptive momentum and push the stock price to become over-valued. On a CNBC special, the question was asked, "Is Google the new Apple?" referring to its analogous "do no wrong" recent stock performance, redolent of Apple's run prior to the enormous recent decline.
Google Glass, the latest project at the California-based giant, is the attempt to make wearable computing a mainstream infatuation. Essentially, it's a smart pair of glasses with an integrated heads-up display and a battery hidden inside the frame. Google Glass takes a step toward ubiquitous computing, which is the idea that the Internet and computers will be accessible anywhere at any time without having to use one's hands. While the frames do not currently have lenses fitted to them, Google is considering partnering with sunglass retailers such as Ray-Ban or Warby Parker, and may also open retail stores to allow customers to try on the device. Wearable computing is not a new idea, but Google's bottomless bank account and inventive attitude means that Project Glass could well be the first product of its kind. Originally, the product was set to be released in 2014, but recent reports suggest the Google could possibly release the glasses as soon as this holiday season. The display, which sits not in your eye line but a little above it, allows you to see what is on the display by glancing up. The glasses also have an embedded camera, microphone, GPS, and bone induction to give you sound.
So why might this ground-breaking product actually hurt the Google stock? Well, Google Glass alone will not decrease the price of Google, but in aggregation with a number of other factors, it could certainly be a key contributor. Many predict that Google Glass may not live up to the hype the advertising portrays, while others say it's the "next big thing." See below for a list of things that could potentially mitigate Google's Glasses' upside.
The Problems with Google Glass
1. Reality Distortion
A major concern of many is that looking through the glasses, which sit just above the eye line, could be a hazardous distraction. Take a look at those who do wear these things and you find them to be constantly distracted by the viewfinder in their right eye. The irony is that while these goggles aim to bring the world together, they can actually form a barrier between humans attempting to interact in the real world. There are a number of parodies that actually make a good point by showing people bumping into stuff; the display could be dangerously distracting, and there may be safety issues too. Imagine somebody driving while trying to pay attention to their Google Glasses - sounds like a recipe for disaster to me.
2. An Easy Target
Having a pair of Google glasses on your head would be easily recognizable to any human being not living under a rock. Furthermore, if these glasses are worth the rumored selling price of $1500, imagine the opportunity for thieves choosing their next victim to rob. People wearing these things will tend to be slightly better off, making them good targets.
Some may think that in the advent of a Google Glass user being attacked, the glasses could take a picture of the offender and dial emergency services. One could only hope this would be a possibility, but realistically, unless the user was able to do this in the two seconds that it would take the robber to rip the glasses off, it's not going to happen.
3. Google Glasses Not Allowed
The first occurrence of Google Glasses being banned in a public place occurred in a in a small café, near Seattle, Washington. Seattle's 5 Point Cafe, whose webpage boasts of "alcoholics serving alcoholics since 1929," has issued a zero-tolerance ban for Google Glass. The announcement was made via Facebook last week and read: "For the record, The 5 Point is the first Seattle business to ban in advance Google Glasses. And ass kickings will be encouraged for violators."
Although the above example is entertaining, it should be a legitimate concern for Google. The person on the other side of the glasses may have no indication that the camera is rolling, and the glasses could be used as an insidious recording device.
Google glass will certainly be one of the most exciting technologies in 2013, but just how consumers will react to the promulgated product is a coin toss. According to Trefis Price Analysis, Google is trading 11% over its value, and recent insider selling could be an indicator that the stock is on the way down. Combine the aforementioned concerns of Google Glass with the speculation that Google could already be over-valued, and we could very well have a case of the next stock to come down with "The Apple Flu."
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.