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Google IPO on its way... My thoughts...

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I am by no means a financial analyser or anything like this. But am i the only one out there who thinks that the 85$/share price for the upcoming Google IPO is just riddiculous. If you take a look at the quick numbers. This means a market cap of about 23 Billions. Now if you consider that their earnings are a little shy of 300 Million a year. Which makes for a P/E of about 80, which is WAY above the average of 10-20.

In addition to this, their only tangible offering at the moment is a search engine only financed by ads and paid placements. Considering they already own a big lump of the market share which leaves little growth potential. Now i know they have other products in the works such as Gmail but in my oppinion they have yet to prove how profitable such a venture can be.

To me it seems that the IPO itself will be a big flop and will serve little purpose than making its executives and employees rich. The way I see it, the stock will start up at 85$, then the clueless hordes which couldn't get into the auction will buy in. But then a few hours to a few days later, when the prices spike over 100$, the realistic investors (including the Google staff) know this is way too much and will cash in, causing the stock to crash down. In the end, i don't forsee the stock being worth much more than mayby 30-40$ (IF THAT!).

Comments

  • Anonymous
    August 19, 2004
    I've always thought that analysts are what cause the fluctuations in the stock market. (Side note: once the initial sell of stock is made, it really has little to do with the company). The price of stock is driven by the traditional supply and demand. If the demand goes down, price goes down. If the supply goes down, price goes up. Now consider that stock analysts give insight into what to buy or not buy. This causes demand or lack thereof which causes their predictions to come true. Any thoughts on that?

  • Anonymous
    August 20, 2004
    I bet they it will be 170$ in one year. Their offering right now is not a search engine but advertising. Search engine just makes these ads rather valuable since there are millions visitors per day out there. The whole internet is in their pocket right now.

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