Google Undervalued at $713 and at $1000

Google's stock is moving dramatically higher - today, doing it on a weak day. Can it continue?

Earlier today, Google hit $713 a share.  The stock has risen close to 8x since its August 2004 IPO.  Those who waited to jump in until it hit $600 on October 8 would have also been nicely rewarded for holding the stock for less than a month.

With the company now emerging as one of the four largest tech companies (only Microsoft, Cisco and Apple are in the same league) and as an advertising behemoth, many have pointed out that the stock remains reasonably priced on a valuation basis.  This website also has some contradictory points of view as well which also make sense.

The company is trading higher on conjecture that it is examining all sorts of opportunities in health care and mobile.  I personally don't believe that Google will be successful with these efforts and if I were the CEO I would focus on just one thing.  I would focus on trying to dominate the ad-sales markets in print, radio and TV and trying to tap the 92% of global ad revenue ($450 million) that has nothing to do with the internet.

Internet advertising, and non-internet advertising, will run in cycles like the rest of the economy.  Google has some serious power in internet advertising and it should use this power to branch into other advertising spaces.  It has the money to do it, and should martial all of its resources in this direction.  If it can do this, before some competitor destroys its core market, then it is underprices at $713 and at $1000.

I found both of these articles very interesting as well:

Google to $325.

Google to $1000.

 

Ari Socolow
Ari Socolow: Ari Socolow is the Chief Economist and Editor-in-Chief at BestCashCow. He is particularly interested in issues relating to financial literacy and bank transparency. Since co-founding this website in 2005, Ari has been frequently cited in the media as an expert on local and national savings accounts, CD products, mortgage and loan products and credit card rewards products.

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Comments

  • WiWio

    November 02, 2007

    Google is a monster.

  • JenB

    November 08, 2007

    If Google were to trade at $1000 today, it would only be 48 times its 2008 PE. For a company with 20% plus expected annual growth for the next five years, that is expensive, but not as crazy as say the valuation on Apple. I say that Google gets there by March.

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