ADT - ADT Stock Jumps 15% on State Farm Google Investments
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It’s not every day that ADT (NYSE:ADT) is talked about in the financial trading community. However, today ADT stock is trending and heading higher due to investments from a couple of well-known businesses. Reportedly, State Farm plans to take a 15% stake in ADT with a $1.2 billion investment. Not only that, but Alphabet’s (NASDAQ:GOOG, NASDAQ:GOOGL) Google pledged to invest as much as $150 million in ADT.
ADT is known as a home and business security-system provider. However, ADT also specializes in modern smart-home technology. Evidently, the company’s security/risk-mitigation and smart-home tech capabilities caught the interest of insurance giant State Farm.
State Farm reportedly plans to invest $1.2 billion in ADT at $9 per share. With that, State Farm will acquiring around 15% of ADT. In addition, State Farm pledged to invest as much as $300 million toward “an opportunity fund to support product innovation, technology and marketing that seeks to differentiate and improve the customer experience for homeowners.”
Furthermore, State Farm will obtain a seat on ADT’s board of directors. That seat will likely go to State Farm’s executive vice president and chief operating officer, Paul Smith.
Google’s Investment Is Moving ADT Stock
Just the announcement of State Farm’s huge stake in ADT should be enough to get today’s traders excited. Yet, there’s another development putting ADT on investors’ radars today.
According to the Wall Street Journal, Google had already invested $450 million in ADT, thereby owning a 6.6% in the company. In addition, Google had previously committed $150 million to ADT “toward engineering, designing and marketing of new products.”
Now, Alphabet’s Google is reportedly upping the ante by is pledging up to an additional $150 million for ADT to develop those areas. Hence, Google’s total financial commitment to this “success fund,” as the press release called it, is currently $300 million.
Naturally, today’s traders are in an optimistic mood about ADT stock. They pushed the share price up 15% at one point this morning, easily clearing the $8 level.
Clearly, State Farm and Google see great potential in ADT’s security and smart-home technology. Perhaps in the coming quarters, as ADT releases its financial and operational results, investors will see the potential as well.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
David Moadel has provided compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.
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