Google – Motorola Deal Impact on Stock Charts
Google (NASDAQ:GOOG) paying $40 a share for Motorola Mobility Holdings (NYSE:MMI) led to a 60% climb at the Motorola’s stock chart this week, with MMI currently trading at around $38 having closed at $24 per share on last Friday. Meanwhile Google’s stock is losing value quickly dropping more than 10% during current week. It’s common for the acquirer of a deal to experience such a share price loss, since there is substantial risk in every acquisition. On the contrary the company, which is acquired and almost always is of lower value of the acquirer, gains in share value expecting support by the big firm. Google paying more 63% more than the Motorola’s stock price is regarded as an aggressive move and certainly favored Motorola’s stock.
Although the acquisition is not to take place earlier than late 2011 and is subject to approval according to world news, the impact on the stock charts of both companies is more than obvious, especially on the Motorola’s one. MMI stock price had found strong support at $20 and disregarding a couple of spikes, the resistance level at $25 seemed credible enough for any short sellers out there. However, due to the significance and magnitude of such a deal with the web search giant and mainly because of the premium Google is willing to pay for the acquisition, MMI stock price opened with a huge gap this week offering enormous profits for any long positions. Traders having bought at $20 level have surely benefited by this deal.