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This 61 message thread spans 3 pages: 61 ( [1] 2 3 > >     
Google Hits $400 a Share and Wall Street Gets Nervous
Brett_Tabke




msg:1233152
 2:04 pm on Dec 3, 2005 (gmt 0)

AP Story [thenewstribune.com]:

“I think the current price is justified, but I just can’t go out and tell my clients to buy the stock now,” said Moran, explaining why he downgraded Google’s shares to a “hold” earlier this week.

Moran values Google’s shares at $425 – higher than more pessimistic analysts like Standard & Poor analyst Scott Kessler, who believes $364 is a more realistic price. Google’s shares closed at $417.70 on Friday.

“I think Google is a great company and it has been a great stock, but I don’t have a lot of confidence the shares will continue to ramp up,” Kessler said.


 

moneymancn




msg:1233153
 2:25 pm on Dec 3, 2005 (gmt 0)

Whilst in Vegas I met an investment banker who assured me they would go to $550/$600 within the next 18mths.
As usual the only real winners are the brokers(who keep pumping out these upgrades/downgrades so that we buy or sell!)
Looking at the competition(or lack of it)it may be worth considering if you have a spare $50K ---Brett?

MM

zeus




msg:1233154
 3:01 pm on Dec 3, 2005 (gmt 0)

this stock will go further up, but a good advice NEVER listen to a brocker, do your own research, remeber the boble who said we should buy, so do your own research, I have done this for a long time and it works.

A tip it will shortly go under 400 again and then go up.

trillianjedi




msg:1233155
 3:30 pm on Dec 3, 2005 (gmt 0)

investment banker...........assured me

Get a new investment banker.

TJ

Tapolyai




msg:1233156
 3:37 pm on Dec 3, 2005 (gmt 0)

One thing I learned over the years dealing and watching amateurs and professionals is to have an exit strategy.

Make sure you have an exit strategy at the bottom, and at the top and then stick to it like glue.

Otherwise you will loose.

zoltan




msg:1233157
 4:03 pm on Dec 3, 2005 (gmt 0)

I have never heard of an exit strategy in stock markets... however I have to admit that I am not an active stock market player. I would like to see an exis strategy model for stock markets.

walkman




msg:1233158
 4:25 pm on Dec 3, 2005 (gmt 0)

>> Whilst in Vegas I met an investment banker who assured me they would go to $550/$600 within the next 18mths.

sure he did. Are you serious? What does he know that we don't? We're talking 18 months here. Google has reached a point where many people are getting nervous and might look for an excuse to dump it. Maybe splitting is warranted, at least average investors aren't intimidated by the $400 price.

I'll say this again: going up so fast might not be best for a company. It rules for GoogleGuy and the early employees, but it sucks for the new ones, and there is a limit on how much Google can grow market cap wise. Will it overtake Exxon or GE? Let's not forget that not everyone can start a new MSFT, GE, or Exxon in a few years, but the entry for a Google type company is much lower; they are plenty of smart people in the world. Plus, suppose Google falls to "only" $120 a share, which is still a lot given its age. What happens? It loses the momentum and is no longer the darling of Wall Street. The trend matters IMO.

venrooy




msg:1233159
 4:35 pm on Dec 3, 2005 (gmt 0)

Google has proven itself to be highly profitable - And it appears that it will continue in the same direction. There may be some investors getting nervous now - But that just means a good deal for someone else.

I think that Google is still on it's way up, as long as they don't screw it up with their ever changing algorithm

GameMasterM




msg:1233160
 6:14 pm on Dec 3, 2005 (gmt 0)

10 percent of Google's revenue gets whacked when they lose the AOL account.
MSN is not sitting still nor is Yahoo or Diller's internet conglomerate. Look at how Murdoch swept up MySpace and changed his netspace dynamic.
Point is Google's search share will be challenged over time and earnings growth will slow. When the investment community sees a hint they will bail out in force and the retail crowd will be left holding the bag.
I would stay clear of the stock.

Freedom




msg:1233161
 6:18 pm on Dec 3, 2005 (gmt 0)

Still on the way up? Ask Warren Buffett what he thinks of their super high price per earnings ratio. It's insane.

simon2263




msg:1233162
 7:25 pm on Dec 3, 2005 (gmt 0)

One of the interesting points made by this article is that Page and Brin have sold $1 billion of shares EACH! Sorry to say but founders selling shares says more to me that tips from investment bankers!

superpower




msg:1233163
 7:40 pm on Dec 3, 2005 (gmt 0)

With all due respect to Warren Buffet, he admits that he knows nothing about technology companies.

Maybe his company would have done better if they had gotten in at the IPO and sold now. That would have been smarter than shorting the dollar all last year.

Not that I am a huge defender of Google...I thought Google was overpriced when it IPOd but since then I've swallowed some pride.

I think it might be pulling back in the next 6 months while we head toward an economic rough patch, but if you buy and hold this thing now I think it will be much higher in the next few years. The question is not should you buy but when--if it pulls back then you look like a champ, if it's off to the races then you look like a chump.

The only thing stopping me from buying is that GOOG is a major source of income for me and if I add them to my investment portfolio then my financial fate is that much more reliant on Google. On the other hand it was Warren Buffet who said: " Wide diversification is only required when investors do not understand what they are doing."

BillyS




msg:1233164
 8:46 pm on Dec 3, 2005 (gmt 0)

GOOG Hmm, let's see if its insane. Let's calculate its intrinsic value. That is, its value versus a very safe investment - Treasury Bonds and let's see how a company like 3M stacks up against Google:

EPS / TBill Rate compared to Price Per Share

Google = 4.53 / 0.0388 = $116 < $417
3M = 4.04 / 0.0388 = $104 > $79.40

Google Fails, 3M passes. You'd be better off with a T Bill, than Google.

What about future value?:

EPS x 5 Year Growth Rate x P/E (normal)

Google = 4.53 x (1.32)^5 x 20 = $363
3M = 4.04 x (1.11)^5 x 20 = $136

So over the next five years, we might expect 3M's price per share to nearly double. For Google, even with its 32% growth rate in EPS, we might expect its price to decline by $50.

So if I could, should I buy 3M and have by investment double over the next 5 years? OR Should I buy Google and lose $40 over the next 5 years? Hmm, $40,000 worth of 3M would be worth nearly $70,000 , while Google would be worth around $35,000.

No Brainer. You can try to ride, but be prepared to jump. And when we're all as rich as Mr. Buffet, then you can criticize him. He buys based on value, he could care less what industry the company is in... I'll tell you who knows nothing, the analysts saying that Google can increase EPS by 32% over the next 5 years. With increasing pressure from Yahoo and MSN it's just not going to happen.

Oh, and if the company is such a great value, then why is their CEO selling $20 million?

skibum




msg:1233165
 9:13 pm on Dec 3, 2005 (gmt 0)

I thought Ebay was also overvalued from day one but it keep going up for years. Is GOOG over-priced? Yes. It will crash at some point at least one would think it should but they just may be able to keep granking out the revenue growth. They seem to be doing everything they possibly can to be everywhere you are with little text ads and its just going to keep growing.

Is there anyone really invading Google's turf? Yahoo!? Get real! IACI? hardly, MSN, maybe if they force people to use MSN search with their new OS.

Google innovates like no one else, they find new ways to serve up what people want. Their market cap is around 40% of MSFT now, so if they can get as big as MSFT a $400 investment in GOOG now should max out around $1000 sometime in the future. I wouldn't be surprised to see it hit as high as $600 in the next year or two but there are much safer investments that over time will probably do much better.

incrediBILL




msg:1233166
 9:35 pm on Dec 3, 2005 (gmt 0)

I just dumped most of my tech stocks as something in the air is making me jittery about most of them. Micro Brewpub restaurants is the ticket as all these overworked stock option coveting yuppies seem to be drinking to forget they work in tech these days and I've already made a nice return on my investment, better than most tech stocks lately except maybe Google.

HughMungus




msg:1233167
 9:36 pm on Dec 3, 2005 (gmt 0)

Google innovates

What has Google "innovated" that hasn't already been done by someone else?

mikey158




msg:1233168
 9:49 pm on Dec 3, 2005 (gmt 0)

I cant resist this thread. So here goes. IMO, GOOG's growth days are gone, which spells bad news for the stock, especially an OVERPRICED stock. However, public perception is that decent and solid growth is ahead for GOOG. It is only you and I that know different.

Give them a couple of quarters of flat or single digit growth and this stock will be WELL under $300. I think the next few quarters will be decent and they can easily meet earnings by increasing their share of margin on Advertising transactions. You've all seen it first hand ... ala... smart pricing ring a bell.

The only competition they have had is Y (Overture). Now Y has the second product ... YPN. Now MS has the first product ... AdCenter. MS will have their publishing product ready next year. So, for the first time next year, ALL 3 search market share leaders will have the Ad buying and Ad selling products.

I have first hand experience with these new products and without a doubt they are better than G. In fact, in response to the YPN product, G answered by putting teams of people together to contact ex G publishers and ask for the business back. Since when does G have people that you can talk to?

Additionally, search is their core competancy. Every week they launch an either useless product or a me-too product that is already dominated by other players ... (mail, instant messaging, etc). Also, think back a month ... does Jagger ring a bell? IMO, their algo is what put them on the map, and is also becoming their downfall. They have coded themselves into a corner.

Im not saying they are going out of business or that they dont deserve respect, because they certainly do. I just think the Glory Days are gone and their current stock price used to reflect dominance, now it reflects hype.

End of 2006 stock price $250-$280. Watch and learn. Short it now.

Lorel




msg:1233169
 10:07 pm on Dec 3, 2005 (gmt 0)

Any company that can't control cannonical and split domain issues (and thus destroying innocent websites--because so many people use Google) is going to have lots of lawyers on it's tail the higher up it's stock goes.

blaze




msg:1233170
 10:24 pm on Dec 3, 2005 (gmt 0)

Well, google is going to grow significantly in the years ahead, unfortunately the current valuation has priced that growth in already.

The problem is, Google is a great stock. Just not at a great price.

mona




msg:1233171
 10:32 pm on Dec 3, 2005 (gmt 0)

I find it interesting that so many analysts, financial gurus, and WebmasterWorld folks continue say how the stock is overpriced and the big crash is coming soon. Many are the same people who've been saying this since it opened. And they have all been wrong. Huh, maybe they don't own any G stock, lol.

One thing I learned over the years dealing and watching amateurs and professionals is to have an exit strategy.

I couldn't agree more, Tapolyai. I picked my selling point, but it's still a long way off ;- ) I openly admit I know nothing about the stock market, but I do know Google.

walkman




msg:1233172
 10:48 pm on Dec 3, 2005 (gmt 0)

mona,
the same things people were saying during the 90's.

incrediBILL




msg:1233173
 11:52 pm on Dec 3, 2005 (gmt 0)

I picked my selling point, but it's still a long way off

Sounds like my wife when Macromedia hit $100 and I couldn't get her to sell.

Well, she sells when I tell her it's time to sell now :)

oldpro




msg:1233174
 1:26 am on Dec 4, 2005 (gmt 0)

Whether Google is currently worth $400 per share depends on how close it is to its point of dimishing returns. G's share price has been driven by its earning growth and its unique market concept. Clearly the bulls are banking on an ever increasing earnings growth. The question is...what's the bottom when earnings growth starts to slow.

BillyS




msg:1233175
 2:40 am on Dec 4, 2005 (gmt 0)

If earning start to slow, the bottom will come quickly. With a P/E ratio that's over 90, everyone holding stock better hope they exceed all earnings estimates.

With EPS at $4.50, the stock's worth about $90. The extra $330 is a gamble.

superpower




msg:1233176
 3:01 am on Dec 4, 2005 (gmt 0)

EPS / TBill Rate compared to Price Per Share

That measurement is irrelevant. It's too short term, doesn't take into account EPS growth and is skewed in favor of a mature,slow growth company like MMM that already has a lower PE with expected lower growth.

EPS x 5 Year Growth Rate x P/E (normal)
Google = 4.53 x (1.32)^5 x 20 = $363
3M = 4.04 x (1.11)^5 x 20 = $136

It would be more appropriate, given growth and the sector PE, to use a PE multiple of between 30 and 60 for GOOG (compare ebay, yahoo and others in sector) and keep the 20 for MMM.

So to revise your figures let's use 40 PE for GOOG

Google = 4.53 x (1.32)^5 x 40 = $726
3M = 4.04 x (1.11)^5 x 20 = $136

Roughly similar returns.

or at GOOG 50 PE:

Google = 4.53 x (1.32)^5 x 50 = $907
3M = 4.04 x (1.11)^5 x 20 = $136

Google would provide a better return.

or at GOOG 60 PE (near ebay):

Google = 4.53 x (1.32)^5 x 60 = $1089
3M = 4.04 x (1.11)^5 x 20 = $136

Hiccup




msg:1233177
 3:57 am on Dec 4, 2005 (gmt 0)

You can take all your formulas, charts and insights and toss them out the window. They do not matter when investing in the stock market. Investing is a guessing game and your odds are 50/50. The markets are driven by 2 factors, fear and greed, nothing else matters. You cannot quantify those two human emotions, therefore you cannot predict where a stock will go with any accuracy.

Will google hit $500, probably, only because the number of people who think it will outnumbers the number of people who think it won't. It's that simple and that is how it has arrived at its current level.

I love the people who think formulas and charts and analysts opinions actually matter. They are the ones who produce the volatility in the markets daily. On a very basic level, it truely is just a matter of opinion, everything else just doesn't matter.

httpwebwitch




msg:1233178
 5:06 am on Dec 4, 2005 (gmt 0)

When Google loses face in a major public story, GOOG will come "down to earth" - they won't plummet, but the stocks will come to rest at a more resonable price. Post-IPO they are taking more risks than ever, it's only a matter of time before they get slammed for their risky skirting around patents and loose interpretation of copyright law. I've seen it happen a couple times with other tech companies that "innovate" very quickly into tough markets, and Google fits the character profile to do the same.

walkman




msg:1233179
 5:38 am on Dec 4, 2005 (gmt 0)

the thing with google @ $400+ a share:
the investor sees how much higher can it go vs. how much can you lose? Tech companies are very volatile.

hyperkik




msg:1233180
 6:20 am on Dec 4, 2005 (gmt 0)

Google should, albeit with a better eye toward the long-term than AOL, use its wealth to acquire assets with real-world value. If it doesn't, well, we had this same discussion about Yahoo! how many years ago?

ashishp




msg:1233181
 7:02 am on Dec 4, 2005 (gmt 0)

simon2263,

Yes, Sergey & Larry have sold $1 billion of shares each, but that is all low-voting stock.

One class of stock has one voting option each (which they sell), while the other has 10 voting options each. This ensures that the founders and everyone else makes money while still retaining control of the company.

Second, the selling (which happens every month) is automated, meaning that the founders will sell the stock regardless of the price. They will sell a specified number of shares every month, whether the price is $1000 or $1 per share.

(Source: The Google Story)

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