Friday, October 15, 2004
Why buy GOOG (Google)
GOOG is a high profile IPO that has already appreciated 70% in the last 2 months. There have been a lot of press about why one should not buy GOOG (Google) stock.
Are there any reasons to buy google? Here are few reasons.
- Google is one of the top 500 capitalization companies that's not in S&P 500. GOOG (Google) will be added to s&p 500 before the end of the year. All the index funds will have to pick up GOOG.
- Adsense. Adsense has pretty much cornered the market of small websites which want contextual ads. My guesstimate is that adsense gives a ~25% cut to the website owner and GOOG (Google) keeps 75%.
- Google has been growing at a blistering pace of 120% y/o/y in the first 6 months of the year. They made 1.35B $ in the first 6 months. From Q1 to Q2 the growth has been 7.5%. giving a discounted rev growth of 6% quarter over quarter remaining year we are looking at yearly revenues of 2.87B. That compares to 2.57B for yahoo! at the top end guided my yahoo! management.
- By the end of year, GOOG will have more rev than yahoo! and more revenue than EBAY. Yet, right now, GOOG is valued at 20% discount to y! and 40% discount to EBAY.
Any other reasons to buy GOOG?
Comments:
google posted a warning on 11/18/04 that margins may fall due to increased revenues. This was old news and already discounted in the stock price. Then why post it? One reason only: so the avaricious idiots that work for Google and got in early would liquidate the rest of their shares so the big institutions could buy them cheap. That will all be over for this lockup expiration by 11/20. Then watch the stock price soar back above 185 on Friday.
google posted a warning on 11/18/04 that margins may fall due to increased revenues. This was old news and already discounted in the stock price. Then why post it? One reason only: so the avaricious idiots that work for Google and got in early would liquidate the rest of their shares so the big institutions could buy them cheap. That will all be over for this lockup expiration by 11/20. Then watch the stock price soar back above 185 on Friday.
thanks for the optimism, mr.anonymous-user.
However, i don't suspect foul-play in this case. The main reason - the company made that announcement, not a financial institution. The company has little to gain allowing big institutions to buy at low price.
I think the street is expecting 16-18% sequential growth, and as a responsible company you have to come out and say that it won't be 12% (as it was in q3)
-ravi
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However, i don't suspect foul-play in this case. The main reason - the company made that announcement, not a financial institution. The company has little to gain allowing big institutions to buy at low price.
I think the street is expecting 16-18% sequential growth, and as a responsible company you have to come out and say that it won't be 12% (as it was in q3)
-ravi
