Google Stock price - I don't get it

I'm thinking about playing some options right now. Put options with a strike price of $390 exp september 2006 are $47. I think this would be a good investment as by september I feel google will be sub $300. I'm going to do some more analysis over the weekend and hopefully make a decision before market open.

 

Google might still have a ways to fall, but remember: Their "disappointing" earnings were still an 82% increase over the same quarter last year. That's darn good growth, and justifies a high valuation.

 

I'm a technical trader, I dont care at all about earnings growth and the like. Stocks rise or fall based on the market buying and selling, earnings reports dont do anything but sway inexperienced investors.

If we're going to talk about the fundamentals, lets discuss YPN. I believe YPN will take over atleast 25% of googles marketshare in the online advertising scene. Yahoo already has many advertisers that place ads throughout the content offered on yahoo, pushing them to run YPN ads wouldnt be much of a strain for Yahoo at this point. Google's sole income is adwords, when YPN goes public Google will lose marketshare and some earnings. I think Yahoo is a better positioned company than Google.

Google needs to do something with its marketcap. With $112B in marketcap I believe Google should attempt a takeover with a company rich in cash with a decent earnings report. This is the only way Google will be able to keep its current value where it is today. If they dont leverage their value they may lose out on a lot of future earnings. I believe GOOG stock is in for a drop, IMO google should use their valuation right now to become a more powerful company.

 

Great, do you think panics that cause sell offs have anything to do with stock movements then

 

Of course.

Many people believe that when a stock falls its due to there being more sellers than buyers. And when one rises its due to a stock having more buyers than sellers.

This is not the case. For an order to go through there must be a seller and a buyer. You cant sell without a buyer and you cant buy without a seller.

Ask is the amount asked by the sellers for the shares. Bid is the amount bid by the buyers for the shares. When there is a rapid sell off many sellers place lower and lower ask prices trying to find a buyer. When an order is executed at a lower price, this new price shows up as the current price. To further explain this I could bid $500 for a goog share and get one INSTANTLY. However if I bid $350 it wouldnt be filled unless someone wished to sell that low.

Obviously the markets have their drawdowns, due to the bidding a group of people can artificially inflate or deflate the value of a low volume stock. Two people buy and sell shares to eachother for consistently higher and higher prices. As they do this the stock slowly moves up in price with each order. Eventually the stock will get to a point where the market is interested in the said stock and people will trade it at the artificial levels. The operators end up selling their shares for a considerable profit.

Thats the markets for ya

 

That is what market makers are for, to insure an orderly market, but when there are no buyers they can drop the bid price 50% or whatever if they wish and that is where the stock will open, they will open it where the support is.

If there is support at $5.00 in a case of bankruptcy or extreme bad news then that is where they can open it!

 

Well, I was a stockbroker and financial advisor for a while, aced both my series 7 and 66 tests, and have had a lot of success managing my own accounts. It's not my current profession, but trust me, I'm not inexperienced.

If you look at 82% YOY earnings growth, and aren't swayed, your method of valuing a stock is very different than mine. YPN is a major concern, but you have to weigh that against the domestic and international growth potential Google has.

I think what you're talking about isn't normal trading, it's momentum/tech trading. If you want to invest long term, you just buy and hold stocks that have solid fundamentals. For the vast majority of people, techinical/momentum trading isn't realistic.

 

I agree 1000%, momentum trading based on relative strength has become very popular, you are right about buy and hold long term though as the best policy for the average investor that is not a day trader!

 

It doesn't matter. My predictions were correct, and if I had Google stock, I would have sold it and got out in time.

 

Your prediction that simply because there was some bad news because of the sensoring in China that the stock would fall in price? Aren't you clever.

You would of sold because of this?

This makes you believe anyone who sold when this news broke 'got out in time'?

Excuse me while I roll around on the floor in hysterics for a while.

Pete

 

I seem to sense a lot of testosterone here...

 

Only because you are in the thread my dear....

 

Please explain to me why you think Google's stock price fell.

 

I told you why here Tesla!

http://forums.digitalpoint.com/showpost.php?p=613925&postcount=32

That is exactly the true reason, I don't know if Pete knew why or not, I just think he questions your logic a bit as I did.

 

I see. I forgot about that internet company in Japan. It is called Livedore, right? It was big news over there. That would definitely explain why Google's stock price fell.

 

You got it man, pull an article on it and post it for the other members, that was the trigger!

 

I found something here. I spelled it wrong in my other post. The name of the company is Livedoor: http://www.thevictoriaadvocate.com/business/local/story/3303433p-3824577c.html

 

Good find Tesla!



February 5, 2006
YURI KAGEYAMA - The Associated Press www.ap.org


TOKYO - Yoshikazu Tsugiyama is devastated that the value of his Livedoor shares have nose-dived - one of the thousands of Japanese investors who had put their money on the Internet company's charismatic founder only to be stunned by his arrest.

"They've turned into pieces of trash," said the 29-year old bar owner, sometimes actor and even less frequent trader.

Stock trading and mutual funds still aren't as widespread here as in the United States and other industrialized nations. About a quarter of Japanese households own stocks, compared to half of American households.

Taking the biggest hit are investors like Tsugiyama, who have gradually been increasing in numbers in Japan with the advent of electronic trading, including the ability to buy shares on mobile phones.

Takafumi Horie, who has since resigned as Livedoor Co. president, was arrested Monday on charges of securities laws violations, including covering up losses, giving false information about subsidiaries and manipulating stock swaps.

The arrest followed a surprise raid by prosecutors a week earlier on Livedoor's Tokyo headquarters, which stunned the public and unleashed a plunge in Japan's stock market, all of which the media have dubbed "Livedoor shock."

Livedoor, founded in 1997, was also unusual as a Japanese company in aggressively appealing to individual investors. Horie used to boast that even a child could invest in Livedoor with spare change, and the company kept on splitting its stock to make it more affordable.

The ranks of individual investors in the company swelled every year to about 220,000 people by the latest count, up by 50 percent in just a year.

Institutions including Fidelity Investments, American Funds and JP Morgan were among the largest shareholders in the company. For example, the Fidelity Japan Fund lost about 9 percent of its value between Friday, Jan. 13, and Wednesday Jan. 18. It recovered some, and is currently down about 6 percent from Jan. 13. But its losses are not too bad: The fund was up about 50 percent since the beginning of 2005 before the scandal broke.

 

Google is playing teeter totter on the 100 day moving average. If it moves lower than the MA by more than $5-6 I think we'll see a huge breakout to the trendlines I suggested earlier.

 

Google is going going gone now. Its fallen below the 100 day MA and even farther below the 100 day EMA which it has never fully crossed. Down to $350 and even below I'm afraid.