is google really worth $300-350 a share?

Discussion in 'Trading' started by jasonjm, Jun 7, 2005.

  1. I think anyone who wants to short this should spend LOTS and LOTS of time studying the YHOO top 5 years ago, as well as other internet stocks.

    What all the hindsight merchants never talk about, is all the people who must have been scorched shorting it (YHOO) prior to the top - they only talk about those who shorted on the right side of the slope.

    The top will come, and may not be far off

    And I think the mortage add revenue issue may be relevant for other sectors as well
     
    #31     Jun 8, 2005
  2. keyser1

    keyser1

    I'm long & overweight (about 30% of portfolio) on google and here's why --

    I think conservatively google will be valued at 360 in febuary 06 (after end of year earnings are announced). I think at the absolutely min, it'll be a 250 stock, and it can potentially top 700+ (although I wouldn't bet on that, like I said I see 360 being a conservative estimate)

    So why do I like google (as a company) --
    --They have the best search algorithm around. When they first developed it it blew away the competition. I haven't kept up with search/database industry research but I would guess that they've improved it since developing the idea.
    --They hire the best people in the industry (the software industry has alot of brilliant people around and google hires the best)
    --Pretty much every major product they've developed (search engine, mapping software, web mail) is better than anyone else's. This is a trend I see continuing.
    --They seem to have a quality over quantity culture. You don't see them clogging up their website with subpar features. They're taking their time in becoming a one-stop portal.
    --Online advertising is expecting to grow at high rates over the next decade.
    --They're able to come up with new ideas on how to generate revenue (eg. quest to become an ad-broker so to speak).
    --"google" is now a verb ("I googled ___." ) Thats gotta have some value. I even heard a radio host say "I googled ___. I went to yahoo and --" So even though he yahoo'd it, he thought that google'd = searched. Being a verb/noun (tivo, q-tip, rollerblade) can't hurt.

    Why do I like the stock (other reasons) --
    --Relative to its peers, institutions are underweight in google. That leaves a decent room for increased demand. Also the inevitable S&P factor (I wouldn't want to be short this stock the day S&P is announced).
    --Its blew by earnings in the past, and I expect it to do the same in the future. It gives no earnings guidance so plenty of upside potential (also added downside potential but I think most analysts are likely to be conservative when they're completely guessing).

    What I don't like about the stock --
    I think recent run-up has been too quick. Would've preferred a more gradual build up (although I made big money on goog options when it went from 220 to 260 so I shouldn't complain too much in addition to the unrealized gain on my stock).

    Bottom line is: I think from now until late 2006 goog is going to be a real bull (late 2006 new windows comes out with integrated web search capabilities..the only thing that I can see as having potential to eat away from goog's user base). I'm still deciding on whether to play the long-call options game with goog though cuz compared to other company's options, goog's seem signicant overpriced.

    Second bottom line: Although I would love a trend reversal and to see this stock go back down to 230 (with no fundamental difference). If this were to happen, I would double down on margin.
     
    #32     Jun 8, 2005
  3. Aaron

    Aaron

    Interesting analysis, Keyser. What else do you like with the other 70% of your portfolio?

    Aaron Schindler
    Schindler Trading
     
    #33     Jun 8, 2005
  4. hajimow

    hajimow

    Unless your portfolio is bigger than 300K, I suggest you not to go long or short on Google. They are not going to split so the stock will only be played by big investors and mutual funds and some stupid traders who will eventually get caught in either direction. Don't try to evaluate Google like the other stocks. Google is an internet idol,it is like M.Jackson in singers that might suddenly fall. If you love Google, Try to find a mutual fund that has 5% of its protfolio in google and thats it and not more than that.Don't try to get rich fast. Just try to follow Google but ignore it when it comes to investing.
     
    #34     Jun 8, 2005
  5. keyser1

    keyser1

    other stocks i'm mid/long-term long on are nfi, ecst, mvl, yhoo.

    brief summary of each --
    nfi hugely undervalued mreit. large short interest/naked shorting keeping price down, good history of increasing dividend
    ecst - online discount retailer, originally found on a screen of worst performing ipos, if it can turn a profit (i expect it will) this year it could have a tremendous pop from current price. although its run up 60% in the past week on no news so i wouldn't buy more unless it pulls back.
    yhoo - same as goog more or less (although i'm debating moving out cuz i've got too much exposure to paid search or riding this thru the end of year).
    mvl - marvel comics. will start making their own movies soon (instead of licensing characters) = increased profit in my opinion.
     
    #35     Jun 8, 2005
  6. Is that why it gives nearly the same exact results as Yahoo & Lycos? Let's get real, Google search is not any different from most other search engines. Also, they ripped off the algo from a certain foreign search engine.

    Google has a simpler lay-out than Yahoo and it is far from a one-stop. Just the fact that they still don't have a finance section is enough to turn me off. That, and after more thourough checking, Yahoo search results are better.

    GOOG might as well go to $350-400 with all the pumping. With all the shorts burned so badly, one can already see how everyone is starting to go gaga for Google, even on this site. Few want to short it anymore, so my guess is that once and if it breaks 300 with force, ppl & the rest of the institutions will pile on. Et_user put it best in the other GOOG thread.

    I missed the run up but I would not touch it here. GOOG is a crazy animal. I just wanna buy some puts if it gets to the 350-400 area.

    I find your other pics interesting. NFI is a risky case, mortages & credit to sub-substandard candidates will be the one of the first to crash once the real estate slows down. Hence the short interest. The dividend yield is amazing though. I'm gonna watch it for the 40 dollar resistance. A news report from the management could squeeze the shorts hard
    ECST, I used to order from them. Very tough business and extremely competitive. Thin margins. They are pretty good but I bet 90% of these won't survive and will probably be gobbled up at a discount by bigger players like OSTK. ECST balance sheet is ok but the income & cash flow just suck. Smells like a dog but if you got it from 3, that's tight.
    Now the MVL situation you mentioned bout going solo with their intellectual property, is that well known or mostly speculation?
     
    #36     Jun 8, 2005
  7. I think keyser makes some very powerful points. As much as I hate doing it, I have to say Jim Cramer is right when he says buy best of breed, which GOOG clearly is. Who knows what they come up with next?

    Also, it seems to me that much of the consternation over GOOG concerns the $300 per share price. If it was $30 per share, I doubt anyone would be so worked up about it. So if they had issued 10 times as much stock, it would just be another $30 tech stock that had run up a lot. No hype, no handwringing.
     
    #37     Jun 8, 2005
  8. As soon as people stop shorting it then it will start to drop.

    John
     
    #38     Jun 9, 2005
  9. Since the float is small, it just emphasizes the idea that rarely anyone is going to get out at the current price if long. If you can envision this, stock prices and volumes to be sold at that (current) price resemble a pyramid. At the ultimate high of any instrument's price, there is only one very small amount of stock that trades at that high (the tip of the pyramid). This is what they call paper profit. At each successive level down, there is geometrically more stock that can trade at each price level down.

    So if the stocks float is 20 million shares, and its last trade was 300.00 per share, there are not 20 million shares that can sell for 300.00 if that is the high. The ironic thing is almost every investor thinks he owns stock worth 300.00 per share, when, in reality, only a very small percentage of that float can be sold for 300.00.

    A 300 dollar price with a relatively small float just means that the pyramid has some very steep walls.
     
    #39     Jun 9, 2005
  10. This is a very interesting post IMO, but from the point of trading psychology. I can spot several patterns of blurred thinking I made myself about 6 years ago. Let's see:


    O.K., you're overweight. In other words, you made a, matter of fact, risky decision. And we humans just hate the possibility to have made a wrong decision, now don't we? One way to solve this so-called cognitive dissonance is by justifying it to others. You basically build your own reality consisting of "yeah"-sayers. That's how the internet bubble fueled and refueled itself. Let's move on.

    Plenty of presuppositions here. I honestly believe you that you're convinced of what you wrote. This is called self-hypnosis (I'm serious).

    Like? LIKE? You mean like, it'd be a problem to sell it with a loss for you if the scenario above (i.e. your subjective future reality) didn't come true?
    Hell, during the bubble, plenty of guys wrote and spoke about companies they "liked". You should like a woman's pu**y, or some style of food, whatever, anything but a stock you're trading in!

    I'm not too much into fundamental analysis anymore (although I hold a business degree), but the above are all nonsensical justifications. Don't get me wrong, no insult here: I am absolutely sure that you're convinced of what you're writing.

    Most analysts are most likely to do what most other analysts do. Or, they get an order to write an analysis that comes to a conclusion that is in one way or the other beneficial to the company. Remember, an analyst's salary also has to be paid for...


    Somehow, I think that there are plenty of other retail investors out there who think the same. Have you also already made plans about what to do with your current and your future paper gains?

    "Never confuse ingenuity with a bull market"

    Once again, you imagined a scenario that has already become part of your subjective future reality. Just like with so many others out there: "If it rose for such a long time, there's no reason for it not to rise further."

    Like I said, my reply is not intended as an insult. But since I've been through pretty much the exact same around 6 years ago, and since I've made pretty much the exact same mistakes I accuse you of, I am very sure that you'll dismiss me as a moron, or someone who wasn't as bright as you when you went long. IOW, I'm a loser, because I fail to understand that this is a new economy google is part of. An economy where old-fashioned ideas such as "business models" or "P/E ratio" don't mean much.

    And by the way: google currently has more than twice the market capitalization apple has.
     
    #40     Jun 9, 2005