GOOG: Be More Impressed with Cap than Share Price


Yesterday, Piper Jaffray raised its price target on shares of Google yesterday to $600 from $445 — that’s a 35 percent increase.

Reuters reported: 

"A Piper Internet analyst, Safa Rashtchy, projected that Google would continue to generate strong, double-digit sales and earnings growth through 2007 and gain market share as well . . . While the stock may have its ups and downs throughout the year, we
believe it will reach $600 by the end of 2006 and we prefer to have one
12-month price target rather than raise it every quarter," Piper’s Analyst Mr. Rashtchy wrote in a note to clients."

Don’t be impressed by the big share price numbers; If GOOG split their stock 10 for 1, would a $60 target for a $43 stock sound that mad? Probably not.

If you want to be impressed, look at their market capitalization — its now over $128B! They are within a stone’s throw of Intel’s $154B cap.

Compare GOOG to other tech firms — they have become bigger than the market cap of Cisco ($107B), Apple ($63B) eBay ($62B), and Yahoo ($58B).  Amazon is tiny by comparison — under $20B.>

Now that’s impressive!



UPDATE  January, 5, 2005 5:30 am

Wired article on the biggest threast to Google’s business model: Click Fraud 

"Pay-per-click advertising is big, big, big business. So are bogus hits on Internet ads. It’s search giants against scam artists in an arms race that could crash the entire online economy."

How Click Fraud Could Swallow the Internet

UPDATE 2 January, 6, 2005 3:53 pm

 Caris & Company’s Mark Stahlman is now saying that Google (GOOG) could trade at $2000/share.

Doug Kass notes "It feels like deja vu all over again . . ."


Forecast for Google Put at $600 a Share
NYT, January 4, 2006

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What's been said:

Discussions found on the web:
  1. Larry Nusbaum, Scottsdale commented on Jan 4

    “Don’t be impressed by the big share price numbers; If GOOG split their stock 10 for 1, would a $60 target for a $43 stock sound that mad? Probably not.”

    Not unless the stock had just moved from $9 to $43. Now, you are asking about another $17?

  2. Emmanuel commented on Jan 4

    Overvalued. Google to me is like a Mercedes S-Class. Sure, it’s a really neat car and everything. All the same, you wouldn’t pay $300,000 for one. IMHO, I can’t see why Google is worth more than Apple and Yahoo! combined. Unlike Google, Apple does hardware and software, while Yahoo! does a lot of similar things as Google. Granted, some of their products and services are not up to par, but most are competitive all the same, and some are even better.

    Google = Cisco for the Noughties? We’ll see.

    Disclaimer: I use Google’s GMail and Blogger.

  3. kmr commented on Jan 4

    If you assume for the near future that Google’s main surce of earnings will be derived from advertising then it is hard to make the case for an undervalued stock. With a capitalization of $128B and a total advertising budget in the US of ~ $240B growing in the low single digits, it is just a matter of time before their growth slows.

    As is true with most fast growing companies the slow down comes just as fast.

  4. stock guy commented on Jan 4

    GOOG is going to smash earnings on 1/31 – look out….

  5. Jack K. Miller commented on Jan 4

    World changing companies are few and far between. Google is in the right time and place to change the world. It is easy to say that the market cap is impressive but it takes an attitude to say the stock is or is not a good buy. It is! Do the Google Gulp if you dare.

    My family has purchased the stock all the way up. We plan to continue to add to our position many more times over the next several years.

  6. dave commented on Jan 4

    If Google were to close its doors tomorrow, I would simply click to another search engine.

    That would not be the case if Cisco, Apple or just about any other large business with that type of market cap shut down.

    Google in my opinion is a modern-day Netscape. Netscape was going to redefine the computer around the web browser and bypass the Windows operating system.

    Just my opinion, but the analyst’s 15-minutes “probably will not be large.”

  7. wnsrfr commented on Jan 5

    The low barrier to entry that Google used to eat Yahoo’s lunch a few years back is still there.

    One warning sign is Google’s recent cozying-up with AOL. That is such a lunch meat move. I thought Google had bright tech people. AOL? Look what it did to Time Warner…

    You can’t short GOOG though, the timeframe of its fall from over-valuation is impossible to predict and not worth the stress.

  8. Alan commented on Jan 6

    I’ve been using this search engine recently, it categories the search results.

    some examples to try (nixon, saturn, helium)

    I quite like it.

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