Quote from scriabinop23:
remember they had something like 68% annualized sales growth even this quarter, and they are getting something like a 28 multiple. these aren't heady valuations. the mere market cap makes it seem that way, but this thing has plenty of upside, mainly because its a multinational and IS the leader. And not just an ad agency. They have a lot of potential -- youtube monetization, etc...
Granted no one believes they will sustain 68% revenue growth, and thats why the multiple is 28 ... but a 35-40 multiple (25% higher.. 600) is really doable in this market.
Nothing bubble about it. Really. Now BIDU getting a 192 price makes me wonder .. they are being priced for accelerating sales growth past 80%. Post last earnings, a 140 target seemed 'fully valued' to me based on 60% earnings growth.
I bought 550 and 560 short july, long aug calendar spreads, so i'll disclose i'm a little bullish the stock. But in the near term, i think it was a little overextended.
I'll be watching on the sidelines deciding what to do with it. Maybe if in one week we are at current levels or lower I may buy aug/sep 510 calendar spreads -- since this has a habit of being stagnant and consolidating.
This may play like RIMM -- back to 550 in 3 weeks. Maybe not. I'm not holding my breath and looking for a new trade, licking my wounds.
But these bears talking 440 ... don't hold your breath. Look at AKAM for an example of a more massive earnings disappointment with lousy guidance, and look how it recovered. Despite goog's spending getting a bit ahead of itself, they aren't guiding for doom filled quarters ahead.
