Google's Stock Price Still Scares Me

Back a little over a year ago, on November 28th, 2006, I told you that I was scared of Google's (GOOG) stock price. At the time the stock was trading at about 60x earnings and every bull on Wall Street was pumping the stock. The stock closed on November 28, 2006 at $489.50 a share.

"With Google's current P/E ratio sitting at about 60 times earnings it does make you wonder. Is Google's stock price already set for perfection? What if advertising revenues don't come in in line? What if there are cracks beneath the surface of Google that we don't know about?"

Google's stock price today? $460. About 6% lower than it was back about a year and a half ago.

The stock's down $26 a share Tuesday alone (about 5%) because apparently people aren't feeling as clicky as much these days as Google might have hoped. This according to the folks at Comscore.

Since November last year shares are off 38%.

The good news is that Google's stock now only trades at about 35 times earnings -- much cheaper than its 60x earnings number a year and a half ago. Still, the rest of the S&P 500 trades at about 19 times earnings which is still a pretty big discount to where Google is trading. By way of comparison, Microsoft (MSFT) trades at a little over 15 times earnings. High flying Apple Computer (AAPL) trades at about 26x earnings.

Analysts of course are still very bullish on the stock. Credit Suisse analyst Heath P. Terry has a staggering $900 price target on the stock.

Personally Google's stock price still scares me. Not as much as it did a year and a half ago, but still some.

Comments

[PenName Dave]

this guy writes under a pen name..... Thomas Hawk..... read his bio.

I'll say 1 thing... ?able!

[blah-blah]

Falling knives are no fun

Under 450 it starts to become interesting but only if it can get back above it's 20 day MA and stay there for a bit.

[WoodworkWackos]

When you take that annoying minor element of timing out of stock analysis, any Dodo can seem like a Hawk!

[Bond]

I believe Google is going to see a price of 410 dollars very soon. Based on the P/E multiples of other high tech companies and the slow down in the sector

[Mikee]

The data from comScore is just sampling and sample data can vary substantially from the real. It was just a big over reaction from scared investors (Google price went down from 700's to 500's fast) and a even the possibility of lower clicks unnerved the investors. But think about it, Google is diversifying ads into video, and then to radio and even TV. They are coming up with Google phone kit, laying undersea cables, working with healthcare industry to store patient records, even Microsoft employees use Google for search! Google is here to stay and make money! Buy it while it is low!

[Tom B]

Google is a bargain. Look at AMZN: 64 P/E.

[PenName Dave]

GOOG maybe cheap, maybe be going to 300 even... who knows... but seekingalpha should at least make sure it authors use their real names.

the authors... for crying out loud....

[PenName Dave]

he's not writing fiction... he's writing about an area of his expertiese.... how can you not state a real name.

SA should do better