Google stock price
I read the following crap from a reputable news wire that I will leave anonymous to avoid their unnecessary embarrassment:
Google Inc. shares fell as much as 5% Monday after a published report speculated that increased competition mounted by the Internet search leader's main rivals could crimp future revenue growth.
Yes, there was a negative cover article in Barron's, but so what? There is actually nothing here that is new news since the moment Google was founded back in 1998.
Barron's even admitted that their "methodology" was "less than scientific."
Get real: There is always and ever the prospect of "increased competition" for all products and services. When was there ever a moment in Google's entire existence when that wasn't true?
The bottom line: It's a slow news day today, so reporters and "correspondents" have to squeeze every drop out of every piece of non-news that they can. The "issue" over this "report" in Barron's will be ancient history by the end of the week.
It's an embarrassment to the investment community that Barron's and it's followers act in such a useless manner.
I don't and have never owned Google's stock and have no recommendation on the stock. I simply think the flap over this so-called "report" is plain simply silly, undignified, and downright unprofessional.
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posted by Jack Krupansky @ 2:01 PM
2 Comments
2 Comments:
Hi Jack,
I'm pretty sure I know what happened. That report came out just two days after I followed up your comment on my Google 2.0 posting ;-) which you can find here.
You know my opinion on Google. It's one of the most over-priced stocks on the market. I just don't see an upside for future earnings growth. The have a lot of diversity in their acquisition pool, but not a single one of their acquisitions offers any income growth beyond adword income, which is not a very easy hill to fortify.
I think that I know a fair amount about Google, and there is certainly much that I don't know about them, but the one thing I know with absolute certainty is that I do not know what the future holds for *any* aspect of Google compared to any stage of their brief history.
A lot of people are *confidently* making wild claims one way or the other, but I simply can't see how they can honestly justify their claims other than as "wild guesses".
Has AdWord revenue (or profits) really peaked? I see no way of either solidly justifying or solidly disputing that assertion. Maybe it has and maybe it hasn't. Who could possibly be so sure about it, one way or the other?
A lot of people are making a big deal about the stock price. I think a lot of people are misguidely thinking that a stock selling for $400 (+/- $50) is inherently overpriced, simply because it's hundreds of dollars. From the perspective of fundamentals, the absolute price is irrelevant. If Google were to do a 40-for-1 stock split, the price would instantly be $10 (+/- $2) and all of a sudden many people would cease talking about the stock price at all even though *nothing* would change about the fundamentals.
Meanwhile, you could go and find *many* stocks with PE ratios or Price/Sales ratios *far* worse than Google and yet people will focus so much attention on how *bad* Google is when they're nowhere near the worst kid on the block.
This is simply an illustration of the extent to which emotions and human psychology are *huge* factors in any discussion about stocks.
Even now, I don't offer *any* recommendation on Google's stock one way or the other. My core claim is that a market is "the sum of all curves" and it is up to each and every investor (and trader and speculator) to make up their own minds about every stock that they consider.
It is important to understand that trading, speculating, and investing are *not* synonymous. New stocks are inherently speculative. The question of when to transition a stock from trading or speculative to investment is quite tricky. The fact that S&P continues to hold off on annointing Google as part of the S&P 500 probably tells us what *they* think.
From an investment perspective I would simply note that Google does not pay a dividend. End of that story.
From a trading perspective, the stock price is quite volatile, and that's what traders like, so Google is an excellent stock for *trading*. Absolute price is not an issue for traders.
As far as speculation, the stock *was* a solid speculation. Now, the stock is in a trading range and speculation is increasingly dicey. But once again, absolute price is not an issue for speculation. Momentum is momentum, regardless of fundamentals.
To be clear, a stock's absolute price has *zero* do do with it's value to stock traders and speculators. And if it's not paying a big enough dividend to be worth the attention of true investors, then why even talk about the stock and "investment" or "investors" in the same breath? That makes no sense.
And a terminology nit: You don't put AdWords on your site; you put AdSense on your site. AdWords is the program for advertisers, and AdSense is the program for publishers (sites wanting to run ads on their own site).
I have AdSense on all of my web sites and pages. It's a very low level of effort and essentially pays for my hosting costs. $5 to $10 a month for a site is worth the effort for a lot of people.
I'll close with a question: Why are so many people so offended or outraged or whatever by Google's stock? Is it simply jealousy, or what? Why not simply *ignore* the stock and focus all your energy on whatever gives a return for yourself?
Decide for yourself whether you want to be a trader, short-term speculator, longer-term speculator, or true investor and then pick stocks based on whether their performance "fits" your own personal profile.
Probbaly one thing I think we can agree on is that Google is not an appropriate stock for *most* people.
-- Jack Krupansky
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