Links
Archives
Here you will find my most up-to-date thoughts on topics ranging from sports to politics to life in general. My goal is to share my unique perspective on the world with others in order to spark debate and conversation.
Friday, August 13, 2004
Google IPO
I put in my bid for shares of Google today. I bid well below the indicated range of $108 - $135. In my view, I just can't justify giving Google a premium valuation over more entrenched companies like Yahoo! and eBay. There has been a ton of discussion on various valuation methods appropriate for Google, but I find that the simplest way to value the company, and the one most likely to be used by investors, is to look at the other large-cap Internet stocks. Here's a simple table based on today's prices:
EBAY: $51.1bn
YHOO: $37.4bn
IACI: $15.7bn
AMZN: $14.7bn
At the end of its IPO auction, Google will have 271,219643 total shares outstanding. At a price of $108 per share, that would give it a market cap. of $29.3bn. Given the above table, I think a price around $55 per share or a market cap. of $15bn is more reasonable.
Some interesting numbers:
Revenue CAGR (1999 – 2003): 803%
99 – 00: 8,585%
00 – 01: 352%
01 – 02: 408%
02 – 03: 233%
CapEx is growing:
01: $13.1mm
02: $37.2mm
03: $176.8mm
04: $300.0mm+
Other thoughts:
Microsoft is entering the market.
Revenue is primarily from paid search which may not grow as rapidly in the future given increased competition from Yahoo! and MSN and the resurgence of content-rich online advertising mediums.
Do you have a view?
EBAY: $51.1bn
YHOO: $37.4bn
IACI: $15.7bn
AMZN: $14.7bn
At the end of its IPO auction, Google will have 271,219643 total shares outstanding. At a price of $108 per share, that would give it a market cap. of $29.3bn. Given the above table, I think a price around $55 per share or a market cap. of $15bn is more reasonable.
Some interesting numbers:
Revenue CAGR (1999 – 2003): 803%
99 – 00: 8,585%
00 – 01: 352%
01 – 02: 408%
02 – 03: 233%
CapEx is growing:
01: $13.1mm
02: $37.2mm
03: $176.8mm
04: $300.0mm+
Other thoughts:
Microsoft is entering the market.
Revenue is primarily from paid search which may not grow as rapidly in the future given increased competition from Yahoo! and MSN and the resurgence of content-rich online advertising mediums.
Do you have a view?
Welcome!
Welcome to Calvin's Views. Here you will find my most up-to-date thoughts on topics ranging from sports to politics to life in general. My goal is to share my unique perspective on the world with others in order to spark debate and conversation.
Do you have a view?
Do you have a view?
