Precisely two years earlier, in August of 2004, there was similar misplaced skepticism about Google's prospects. Recall, at the time there was much weeping and gnashing of teeth about Google's imminent IPO. The company's founders had given an interview to Playboy magazine, violating the pre-IPO quiet period; many people thought the Dutch auction format would hold back the price, to the point that it would likely fall on the offering; it was a late-summer offering; and the likely price was even revised downward, with it falling from $120-ish to $75 or so.
Here is some sample reading from that time:
What is interesting to me isn't merely beating up on journalists for writing what they were hearing. What is interesting is how many supposedly savvy market participants fed such wrongheaded analysis to said journalists.
Okay, you can argue that some were trying to keep the price down so they could play the pop, but that is giving too many people too much credit. More likely, to my way of thinking, is that most of these people genuinely believed what they were saying, but didn't take into account that old market saw: If everyone believes something is going to happen in the market, it has almost certainly already been discounted into the price/expectations. Google was a lovely case in point, as I pointed out in a column before the offering.
On that note: It is interesting seeing how Google's market capitalization has chased Microsoft's (MSFT) since Google's IPO. We have seemingly plateaued at a little under 60% for a year now, but any takers on bets with respect to how long that holds?