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GOOG today
- Thread starter Walther
- Start date
I wouldn't be suprised to see GOOG not have an up day for a week. I would see 350-355 as a safe re-entry to go long again.
The problem is that it is overpriced. A large majority, over half, of their earnings is from ad revenue. It is very likely that a competitor will come and take a portion of that. Even 10-20% of that is a huge chunk of cash they (or any other company could afford) just can not afford. Very few of google's other potential streams of revenue have proven themselves to be worth a dime. This is why GOOG is a stock to short.
Did everyone forget 1999-2001 tech boom/bust?? 58 times earnings, or you serious? Make the smart move.
Did everyone forget 1999-2001 tech boom/bust?? 58 times earnings, or you serious? Make the smart move.
If you are smart you would buy more. 500 coming soon.
It is simply waiting for YHOO to also come with a add tool.
The level of 400 implies growth targets which can only be achieved if nothing goes wrong for the coming 5 years.
And you know how much the insiders cashed last year? In the order of 5 billion $.
Do you thing Gordon Moore and the other founders of Intel cashed 2 years after the exchange listing?
Even after 30 years these guys still have big parts of their initial shares!
The level of 400 implies growth targets which can only be achieved if nothing goes wrong for the coming 5 years.
And you know how much the insiders cashed last year? In the order of 5 billion $.
Do you thing Gordon Moore and the other founders of Intel cashed 2 years after the exchange listing?
Even after 30 years these guys still have big parts of their initial shares!
In the charts, GOOG appears to be at the bottom of an upward bull wedge, correct?
Fundamentally, I thought GOOG was overpriced at the current PE of 55. But for a company like this one a PEG ratio of 1.3 is pretty low.
I found a handy dandy stock price fundamental value calculator online that I used on GOOG stats:
http://www.moneychimp.com/articles/valuation/dcf.htm
Here's what I plugged in:
EPS ttm is 6.85
estimated 30% EPS growth for the next 5 years, assumed 5% thereafter
Assuming a (50 year historical average) rate of 10% on the S&P500.
Stock Value per share is $389
Go figure!
OK let's redo the numbers with less optimism:
EPSttm 6.85
EPS Gr. 5 yr: 20% (1% thereafter)
S&P500 rate 5%
GOOG stock value: $389
Now IF google were to only grow by 20% on average for the next 5 years and IF it only made 1% thereafter, and IF the S&P500 did return 10% average annually over the next 20 years. A fair P/E for GOOG would be 24.
Now... which scenario do you think is the most likely?
Fundamentally, I thought GOOG was overpriced at the current PE of 55. But for a company like this one a PEG ratio of 1.3 is pretty low.
I found a handy dandy stock price fundamental value calculator online that I used on GOOG stats:
http://www.moneychimp.com/articles/valuation/dcf.htm
Here's what I plugged in:
EPS ttm is 6.85
estimated 30% EPS growth for the next 5 years, assumed 5% thereafter
Assuming a (50 year historical average) rate of 10% on the S&P500.
Stock Value per share is $389
Go figure!
OK let's redo the numbers with less optimism:
EPSttm 6.85
EPS Gr. 5 yr: 20% (1% thereafter)
S&P500 rate 5%
GOOG stock value: $389
Now IF google were to only grow by 20% on average for the next 5 years and IF it only made 1% thereafter, and IF the S&P500 did return 10% average annually over the next 20 years. A fair P/E for GOOG would be 24.
Now... which scenario do you think is the most likely?
GOOG Google capex, cash compensation rising: filing - Reuters (376.94 ) *****
Reuters reports Google (GOOG) has warned investors that a sharp rise in spending on its data centers and increased cash compensation could crimp its finances, the co said in a quarterly financial report filed on Wednesday. In changes to the management discussion section of its 10-Q report, Google stressed that 2006 spending on the data centers it needs to run its growing range of Web services will jump, reiterating what its executives have said since earlier this year. They also said it will boost the cash compensation it uses to reward employees. Google replaced benign language about its capital spending needs with the sentence: "The annual rate of growth in 2006 of our spending on property and equipment will be substantially greater than the annual rate of growth of our revenues.'' "Our cost of revenues will increase in 2006 primarily as a result of anticipated increases in traffic acquisition and data center costs, although traffic acquisition costs may fluctuate as a percentage of advertising revenues,'' Google stated. The Q2 filing with the SEC also stated that "our cash-based compensation per employee will likely increase.''
Reuters reports Google (GOOG) has warned investors that a sharp rise in spending on its data centers and increased cash compensation could crimp its finances, the co said in a quarterly financial report filed on Wednesday. In changes to the management discussion section of its 10-Q report, Google stressed that 2006 spending on the data centers it needs to run its growing range of Web services will jump, reiterating what its executives have said since earlier this year. They also said it will boost the cash compensation it uses to reward employees. Google replaced benign language about its capital spending needs with the sentence: "The annual rate of growth in 2006 of our spending on property and equipment will be substantially greater than the annual rate of growth of our revenues.'' "Our cost of revenues will increase in 2006 primarily as a result of anticipated increases in traffic acquisition and data center costs, although traffic acquisition costs may fluctuate as a percentage of advertising revenues,'' Google stated. The Q2 filing with the SEC also stated that "our cash-based compensation per employee will likely increase.''