Forum Moderators: goodroi
“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.
MM
A tip it will shortly go under 400 again and then go up.
investment banker...........assured me
Get a new investment banker.
TJ
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.
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.
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
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."
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?
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.
Google innovates
What has Google "innovated" that hasn't already been done by someone else?
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.
The problem is, Google is a great stock. Just not at a great price.
One thing I learned over the years dealing and watching amateurs and professionals is to have an exit strategy.
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 :)
With EPS at $4.50, the stock's worth about $90. The extra $330 is a gamble.
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
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.
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)
