Google investors will lose their shirts

By Author Charlie Gibson Feb 13, 2006

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The analysts are getting more and more excited about Google (GOOG, $446.9). Back in 2004 the shares listed at $85 – less than the company had hoped. But since then, they’ve been on a tear, hitting $465 this week and apparently set to head higher still.

Mark Stahlman of broker Caris & Co sees them hitting $2,000 each, while broker Piper Jaffray is looking for $600 and Goldman Sachs $500. The bulls say that the firm’s core market is still expanding, that it is moving, and can continue to move, into new revenue-producing areas and that the intrinsic value of its brand is huge.

But can Google shares really rise for ever? No, says Ben Elgin on BusinessWeek.com. Google spends a lot of time talking about breaking into other markets, but 99% of its revenues still come from its original search-engine concept, so much of the growth being priced in by analysts remains very much unproven.

It’s also trading on a p/e of more than 100 times, which leaves no room for disappointment at all. “If investors get nervous about the internet sector, Google investors will lose their shirts,” says The New York Times.

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Published in Tips & advice | More articles by Charlie Gibson

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