Google (GOOG) is a technology powerhouse, and it shows. The company has its hands in enough pies that it is really just a matter of time before it all comes together and Google becomes even more of a force than it already is. The company's very name has become synonymous with search engines and, to a large extent, mobile phones, but now it may have a new project on the horizon -- peer-to-peer lending.
Google Buys Lending Club Stake
Google recently bought a stake in peer-to-peer lending company Lending Club, edging out several early-stage investors. The purchase puts a value of $1.55 billion on the lending company, a valuation which is triple the amount venture investors placed on the company just one year ago. "It's a strategic investment for Google," said Lending Club Chief Executive Renaud Laplanche. "We will be working on some new initiatives [together] and already have some concepts."
As noted in Forbes, Google is no stranger to working the crowd. The company used crowdsourcing to generate ideas for its new Google Glass offering and "Google Ventures, the search engine's venture capital arm, has become a significant investor in crowd-based projects." In fact, over the last 12 months, "Google Ventures has invested in at least six crowd businesses, according to researchers at crowdsourcing experts Massolution.com: CustomMade, Luminate, Trada, RoqBot (now Rockbot), Smarterer and Space Monkey." With a track record like this, Google's investment in Lending Club is no surprise.
Google has not officially commented as to whether the investment is merely strategic or if there is a financial component. -- and in fairness, neither would be a surprise. "Google has invested $1 billion in clean-power projects since 2010," writes the Wall Street Journal. The search engine giant has also "taken a few select equity positions in tech companies including videogaming network Machinima, wireless Internet service provider Clearwire Corp. (CLWR) and gaming company Zynga Inc. (ZNGA)." What's more, these investments have been separate from "the company's fast growing corporate investing arm Google Ventures, which now invests roughly $300 million a year in mostly fast-growing, early-stage startups."
Drawing Down the Crowd
The goal seems to be for Google to get a seat at all the tables that complement its existing offerings and initiatives. Google is diversifying its interests but they all focus on the same thing -- making money off the crowd by meeting a unique need. For instance, CustomMade provides a way for users to crowdsource custom projects to artisans while Rockbot is a social music platform which allows listeners to request songs and then vote on the queue. They involve two very different subjects but both rely on what Google does best -- meeting the needs of the crowd.
It seems to me that Google is stacking the deck so that when the company is ready it can emerge with a range of crowd-based solutions, possibly positioning it as a one-stop shop for the masses.
Right now, Google is popping. The stock just hit a new year high of $863.87 and there is no indication the company could be slowing down. Consensus estimates give the company a one-year target estimate of $897.58, but I think that could be a bit conservative. I wouldn't be surprised if the company hits the $1,000 mark in the next year. Investors would do well to buy in before the ante gets too high.