Sunday, June 8, 2014

Sony Corporation (ADR) (SNE): PS4 Google Trending In The Right Direction

Today is the day that gamers will be able to purchase Sony Corporation's (SNE) PlayStation 4 a.k.a. PS4. It's the generational upgrade since PlayStation 3 was released in the US in 2006. This version will be priced at $399.

As we like to do with much anticipated, new product releases, iStock checked Google Trends to see if we can get a sense of how popular the PS4 will be with consumers. So, we compared search volume intensity for the keywords "PS3" and "PS4"

PlayStation 3 was available for sale on November 17, 2006. At the time, SNE was trading around $40 per share. On May 22, 2007, Sony shares hit an intra-day, 52-week high of $59.84. Obviously, shareholders were happy to ride the success of PS3 for nearly a 50% gain.

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The question is whether PS4 will follow PS3's success, blaze its own trail, or dash the hopes of investors.

On November 17, 2006, search volume intensity for PS3 peaked at a score of 60 out of 100. Fast forward to today and we find that web queries for PS4 are reaching their high, but about a third less than PS3's November score.

iStock anticipates that PlayStation 4's score will continue its vertical ascent tomorrow. PS3 saw its search volume intensity jump by 69.5% on launch-day verses launch-eve. If the same trend holds, then PS4 should push a Google Trend score of close to 70, which could mean that PS4 will have a more successful start than PS3.

[Related -Sony Options Active As Shares Hit Fresh 52-Week High]

Sony's stock chart shows that investors are gearing up for a hot start. SNE shares have jumped a couple of bucks in the past few days. Wall Street's interest appears to be building as volume is stepping up as tomorrow approaches. In fact, yesterday was one of the top 10 active days for 2013.  

The enthusiasm helped create a bullish MACD crossover, which has been a reliable buy signal for SNE shares in the past year; four-! out-of-four times, Sony's share price increased immediately afterwards. This time, PS4 could prove to be the catalyst that makes it five-for-five.

Overall: Google Trends suggest that PlayStation 4 should be well received by consumers. iStock does have some concerns as PS3 was initially sold at less than what it cost to build the console. If Sony applies the same model again, then margins and the stock could take a hit, which is exactly what happened in 2006 before Sony Corporation's (SNE) embarked on its 50% march higher. 

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