Google Stock price - I don't get it

The thing is, at yesterday's close, GOOG had a P/E ratio of over 95. Now, P/E ratios aren't everything but they do offer some information when it's that high. Basically, the higher the P/E ratio, the higher the growth has to be for a stock to be able to sustain its value or perhaps grow its price even more.

Now, GOOG has a high growth rate. They almost doubled their profit from the same quarter a year ago. Unfortunately, this growth rate of "almost double" wasn't enough in the markets eyes for GOOG to warrant that type of valuation.

GOOG even at these prices is an expensive stock. The "premium price" factors in a certain growth rate. If GOOG can not meet that growth rate, then the market will be disappointed. If the market is expecting a stock to quadruple their earnings, simply triple earnings as good as that may seem is not good enough.

 

It will be interesting to see where Wall Street opens the stock this morning.

Google has opened, down about $39.00 so far...

http://www.marketwatch.com/tools/quotes/quotes.asp?symb=goog&siteid=mktw&dist=mktwqn

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It's still climbing back though. -36.88 at the moment.

Looks like the price is rising on the back of people taking the chance to buy stocks at a lower price?

 

You will know by the end of the day, just keep watching.....

 

its rising back because their revenues were inline with expectations, but some unexpected taxes knocked the eps down a bit.

 

I think Google will start trading like a normal stock now, the honeymoon is over at this time!

When you see Wall Street analyst's come out one after the other saying they have a $500.00, $750.00 & even a $1,000.00 price target, that is a sign that they are over hyping the stock and that is when smart investors sell.

 

Google is way over valued in my opinion. If you buy $88 of stock, you get a peice of $1 profit in a year.. That's what the P/E ratio means.

That being said, if you think that google is the only high growth stock out there, your clearly miss interpreting the market. Since google has so much publicity, the stock will rise, institutions will get out, then the individuals.. As an individual there is little hope to not get screwed.

For a simple growth comparison, look at google vs apple. Except I would not recomend apple for the long term either. (disclosure, I do hold a position in apple)

If you are looking for some long term growth you might want to check into construction companies.

Before the great depression, everyone was in the stock market. If your shoe shiner was in the market... that's the time to get out, its over inflated. That is what I think is happening with google.

A high risk company that many people are projecting 10 fold gains is rambus (rmbs).

Disclaimer, I am not offering financial advice. You should do your own due dilligance before investing in anything mentioned above, or really any investment.

 

The stock has strong relative strength and that is what investors like, it may be over valued, but it has held up well since the major sell off last night, I thought it would be much worse!

There is a lot of support out there coming from major holders like Fidelity Mutual funds which is a majority owner of Google!

If they dump the shares, look out below......

 

and its back above 400 and climbing further in after hours trading

 

Tomorrow is another day .......

It was a very good day for Google to say the least!

When your stock is down $30.00 and it is still a good day that says something for sure!

http://www.marketwatch.com/tools/quotes/quotes.asp?symb=goog&siteid=mktw&dist=mktwqn

It could have been worse......

Someone is supporting the stock for the moment, could be Fidelity Mutual Funds for all we know and the other Wall Street firms!

 

After the news that Google was going to censor their search results in China surfaced, I predicted their stock would plummet. It turns out I was correct. Any smart investor would have sold their stock the day that news surfaced.

Any time you hear bad news or controversy about any company, it is time to sell if you are holding shares.

 

That may have been a small factor, but a very small one, Google had been on a straight line up before that and euphoria and irrational upgrades by Wall Street analysts pushed the stock up!

The sell off started with an internet company in Japan getting hammered and investors started selling Google because of that and a major sell off in Japan after trading was suspended on the Japanese internet stock!

For a real time quote on Google click the below link..

http://www.marketwatch.com/tools/quotes/quotes.asp?symb=goog&siteid=mktw&dist=mktwqn

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Again it's taken a bit of a dip to between 380 and 382, Starting to understand the different factors that affect it a bit though..

 

The major factors are Wall Street firms and mutual funds that hold large amounts of Google like Fidelity.

If they decide to short the stock look out below!

 

Trying to understand the many factors that govern Google's short term movements is crazy. You can't get into the head of institutions. Some companies report great earnings, surpassing estimates and even those stocks can fall. Best thing to do is analyze Google's competitive advantage, where the industry is headed, and then be patient and wait for a pullback to buy more. There are analysts in Wall Street that do this 12 hours a day, 7 days a week, and even they get it wrong 50 times out of 100.

 

You are right, but when major institutions decide to take a short position they have a lot of power to dictate the long term direction of a stock, they have PR guys that get on CNBC and talk them down too!

Wall Street works in strange ways, they push them at the same time and talk them down at the same time too!

You just don't want to be on the wrong side of the deal when it happens!

 

The deal with most brokers is the tell people to buy stocks what they own.
You have to do your own research...As for Google they are most likely over bought at this point and will have to drop to adjest to worth..

Feel free to do research here. http://a1st.us/finance.htm

 

Its called a market. When shareholders sell their shares and their are more people wanting to sell than to buy the shares will drop when lower and lower ask prices are established.

Google is way overbought, any technical analyst will tell you that. If I was running the company I would have split 16:1 at $400 and taken the price down to $25 a share. Generally when splits happen the market buys up the stock like wildfire. Had google done this, they could increase their market cap and expand on future takeovers.

Google fell through the support line and IMO is headed back to $350 for the time being. Its got some support at $325. From there it goes back to the trendline, and if it falls through the trend, its WAAAY down for google.

Edit to add a chart

 

What a rediculous thing to say.

Perhaps if the bad news or controversy about any company that may make it fall on its arse, yes, it would be time to sell.

But for the sensoring of results in China? Err no, I don't think so buddy.

Pete

 

Good analysis LinkSales. I have a feeling that you may see GOOG punch through their trend support and move down to a lower price level. The volatility that GOOG has is a double edged sword - it is great on the way up, but heartbreaking on the way down (if you are long)...