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Topic: Google’s stock soars, but why? (Read 1248 times) |
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Walter Watts
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Google’s stock soars, but why?
« on: 2004-11-14 16:14:34 » |
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Google’s stock soars, but why?
By RACHEL BECK
AP Business Writer
NEW YORK (AP) — Sometimes when stocks soar, it has nothing to do with
investors’ genuine interest in the company’s prospects. They just buy
because the stock is going up.
That jump-on-the-bandwagon approach was often seen during the late 1990s
boom, when so many stocks raced ahead without much of a reason, and now
it may be contributing to the rally in Google Inc.’s stock.
Google shares have more than doubled in value in the three months since
the Internet search engine company’s stock began trading, and the stock
continues to be the talk of Wall Street. That makes it all the more
crucial for investors to consider what’s really driving that run-up
before they dive in.
Even though Google was expected to be the biggest IPO in a long time and
had a solid brand name, no one expected this kind of response to the
stock. That’s especially true of all the critics out there before the
IPO who talked about the risks of a company that directly competed with
more established giants such as Yahoo Inc. and Microsoft Corp.
Those concerns seemed justified after Google, just weeks before its IPO,
lowered the target price for its stock from $108 to $135 a share down to
$85. Maybe, some thought, Google wouldn’t live up to its pre-IPO hype.
But those doubts faded fast as soon as the stock hit the street on Aug.
19. Day 1: Google shares close over $100. A month later, its stock sat
at $119. Two months later: $147.
Then on Oct. 21, the Mountain View, Calif.-based company reported
earnings that came in significantly better than expected. For the third
quarter, Google earned 70 cents per share, topping Wall Street’s
expectations of 59 cents. The company brought in $805.9 million in
revenues, more than twice the $393.9 million from the third quarter a
year ago.
That news sent Google’s stock soaring over the next several weeks,
crossing the $200 a share threshold for the first time last week.
Clearly, investors were impressed with the strong earnings and they
expect the same kind of results looking ahead. Same goes for Wall Street
analysts, most of whom have raised their profit forecasts and upgraded
their ratings on the stock.
"This is a company that is built on a real business model," said Martin
Pyykkonen, who covers Google for the investment firm Janco Partners,
Inc., in Denver.
But he warns, its stock is now "priced for perfection" so any hiccup —
such as a slowing growth rate or increased competitive pressures — could
throw it off its current course. And, as he points out, it doesn’t help
that other factors, outside of company fundamentals, could be pushing
the stock ahead.
For one, Google may be attracting momentum investors, who buy solely
because they want to get in on a stock that keeps going up. The shares
may also be getting a lift from interest from big institutions looking
to solidify a position in anticipation that the stock could be added to
one of the major market indexes, like the Standard & Poor’s
500.
There is also the likelihood that short-sellers — those betting on the
stock’s decline — are getting squeezed. In fact, about a third of its
shares available for trading are being shorted, according to data
through Oct. 15, the latest information available.
In addition, there is a very small supply of Google shares in the
marketplace available to the public. But that will soon end as millions
of shares owned by company insiders become eligible to be traded — a
troubling issue noted by UBS analyst Benjamin Schachter in a report
issued last week which forecast some weakness in the stock over the next
12 months.
He points out that Google’s float will increase 233 percent from about
27 million shares to 90 million shares by the end of the year, and will
rise by an additional 200 million shares by the end of the first quarter
of 2005.
With such factors in mind, the big question now is what’s to come.
Chris Sherman, who writes a daily newsletter called SearchDay that
tracks the Web search-engine business, thinks Google has deep pockets to
fund its growth and has great opportunities for new business from
companies all around corporate America.
Still, he warns that the company "has grown so quickly and is being
pulled in so many different directions, the challenge of the management
team is to keep everything aligned," he said. "Really, it is Google’s
game to lose."
And only time will tell if Google can keep playing like it has.
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Walter Watts
Tulsa Network Solutions, Inc.
No one gets to see the Wizard! Not nobody! Not no how!
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LenKen
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Re: virus: Googles stock soars, but why?
« Reply #1 on: 2004-11-25 02:54:59 » |
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I know this is only tangentially related to the main topic of this thread, but has anyone used Google’s new Google Scholar?:
http://scholar.google.com
I just now heard about it via a brief article in The Scientist (“Google Scholar welcomed: New academic search service is applauded but librarians, academics have some reservations”—by Doug Payne) at this URL:
http://www.biomedcentral.com/news/20041123/01
<snip>However, Michael Eisen, co-founder of another open-access publisher, Public Library of Science (PLoS), pointed out that people using the service will face an important obstacle—many of the articles are only available to journal subscribers.
“While Google may have the noble goal of making ‘the world’s scientific literature universally accessible,’ the fact remains that most of the articles returned in a Google Scholar search can only be accessed by those fortunate enough to have a subscription to the relevant journal,” he told The Scientist.
A PloS spokeswoman added: “Google will find that they can better serve their searchers’ needs for access to complete scholarly articles by ‘flagging’ as open access or ranking more highly those that are freely available online. Such a system would minimize people’s frustration at finding an article that looks perfect for their research needs but discovering that they are unable to access it. This frustration is already quite evident in the various threaded discussions occurring online.”<snip>
_____________
Walter Watts <wlwatts@cox.net> wrote:
Google’s stock soars, but why?
By RACHEL BECK
AP Business Writer
NEW YORK (AP) — Sometimes when stocks soar, it has nothing to do with
investors’ genuine interest in the company’s prospects. They just buy
because the stock is going up. . . .
’Tis better to have loved and lost
than never to have known what it’s like
to have sex with someone besides yourself. —LenKen
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Drakeo Vortex
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Re: Google’s stock soars, but why?
« Reply #2 on: 2004-11-25 04:20:12 » |
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I think's it's pretty obvious why it's soaring. If you own a computer have access to the net and use google a lot you have $$$$$$$$. All across the globe the audience of google users are the main body of consumers.
Google status among it's competition is enormous. It has almost cornered the verage citizen market to search for truth. "power corrupts abosulte power corrupts absolutely". Those that feel they are the engineers of humanity are tweaking thought for thier dollar.
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simul
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I am a lama.
 
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Re: virus: Re: Google s stock soars, but why?
« Reply #3 on: 2004-11-25 13:59:28 » |
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When Google went public, it was a big “starter gun” for
a) old-time Google engineere to leave
b) new startups to start building a better search
And it was the end of the days when the founder ran the company under the slogan “don't be evil”
The funny thing is, Google's on it's way out even though there isn't something to replace it yet.
But there will be.
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First, read Bruce Sterling's "Distraction", and then read http://electionmethods.org.
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