|PE ratio does not mean a thing |
Okay P/E ratio may not mean a thing to you, but I'm fairly certain the market will correct iself as it loves to do. Since Yahoo!, a better company in my opinion, is at a P/E ratio of 100 and in a similiar industry, I believe Google's stock price will drop overtime to reflect this.
Just a clueless webmaster's take on the stock market of course. I figured finding out what broker a fellow webmaster who was planning on shorting Google was planning on using seemed like a good idea. Thank you though for your advice.
Google's claim to fame is name recognition, not revenue. As a private company they might be doing great, but as a public company their annual figures are nothing to brag about. What people are missing here is that Google doesn't need additional capital to do anything. Google's income isn't preventing them from doing anything they want to do, so going public doesn't really benefit the COMPANY, it makes the owners billionaires and that's it.
When you buy stock in a company, you are giving that company your money and hoping they will do something with it and give you back a return. This isn't going to happen with Google - they're selling $36 Billion worth of stock and have no way of earning enough cash for investors to see a return on their purchase because they don't even generate 1% of that in annual revenue. Name recognition doesn't keep a shareholder happy, profits do. Google's stock is going to go WAY DOWN almost immediately after IPO. It's going to land at around 1/3rd of the IPO price.
I would have to disagree there. Look at their revenue growth, margins and profitability. They are all in bragging territory if you compare them with the market.
|but as a public company their annual figures are nothing to brag about |
no they are selling much less than that.
|they're selling $36 Billion worth of stock |
I thought they generated something like $1.4 billion during the first six months of 2004 and that is using much more conservative revenue recognition guidelines than Yahoo. Annualize that and we are into double digit percentages.
|because they don't even generate 1% of that in annual revenue. |
|Google's stock is going to go WAY DOWN almost immediately after IPO |
|something like $1.4 billion |
This is exactly what I mean by how misinformed everyone is about Google's numbers. Their actual annual profit is around $100 Million. Their stock is priced at about 150 times their annual profit per share - it's heading straight down after IPO. Save your cash.
revenue is not profit
Maybe not, but profit is what determines how much a stock goes up or down after you buy it :)
Actually other people's perception of the stock and its potential is a much important factor.
The other thing about this IPO is a lockup period as short as 15 days for some insiders. After six months, up to 262.5 million share could flood the market.
So you've got what seems to be an over-priced IPO, a market that can be flooded with shares starting 15 days out that turns into a tidal wave 6 months out. If the stock stays at at least at half of the low end of the projected IPO price throughout the lockup milestones, a ton of employees who could be overnight millionaires who may lack motivation to keep going to work or may have the means to go out and start their own companies. It'll certainly be a test to see if Google folks love their jobs.
If bottom-line growth is tied to AdSense growth, that isn't exactly encouraging either.
>Their stock is priced at about 150 times their annual profit per share - it's heading straight down after IPO. Save your cash.
I'm not sure it is heading straight down, but over the long-term I agree down is the only way.
If you want to bet on a quick horse race then I think you have a 1 in 3 chance, if you want to invest in the long-term you most likely have a 1 in 100 chance.
This is not a stock for long-term investors. It is a stock for gamblers.
I'm still 90% invested in the lousy bond market, so you know how much I will be investing in Google! Absolutely nothing!
For those that win over the short-term and take a risk....job well done, but I'm not taking the risk!
Google now being probed by SEC for possible stock violations...the IPO will be delayed...could be a big foul up for them..
"...state regulators said they are investigating the search engine for possible securities violations."
Regulators Probing Google Stock Grants [sfgate.com]
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