Google Sets IPO Pricing

It appears that Google has set their IPO price - 108$ - 135$ per share. Yowza. A reminder that this is done through the Dutch Auction ^? process, which makes that pricing even more...uh...interesting.

Comments

Probably worth it though....

[BWJones]

Wow, this kinda reminds me of the Palm IPO pricing bit, where when I found out about the price per share, I lost complete interest in purchasing any and told my broker to not purchase. (boy am I glad about that). However, this is a different matter in that the search engine is in just the beginning of its time here while the Palm IPO was what.....8 years after the Newton was released? Also, even though I am a fan of the Palm Pilot, Palm has had no real innovation going on for quite a while (it would be nice if Apple had released their PDA to force folks to innovate a little more). While Google on the other hand is still running their company like they are actually interested in innovating and are forcing a number of fairly sizable companies to innovate to keep up which is always good for the consumer. This is a company that I will be interested in investing in even at $108-$135/share.

Re:Probably worth it though....

[Sc00ter]

"However, this is a different matter in that the search engine is in just the beginning of its time here while the Palm IPO was what.....8 years after the Newton was released?" I don't know about you, but I remember using search engines in '94, that was 10 years ago.

Web index as revenue generator

[manmanic]

I think it's a fair price. It reflects the money Google will make in future from selling access to their web index and associated technology - a market that they haven't even begun to seriously develop. The Internet is going to be around for ever, and its content is going to keep growing exponentially until this scary vision is fulfilled. Google's search results represent (to date) the best attempt to organize this information in an intuitive user-centric way.

In fact, they already provide programmatic access to their results via the Web APIs, spawning services ranging from a recipe generator to a site for detecting online plagiarism. According to this story, the developers of Google Alert, one well-known APIs application, have recently been granted permission to commercialize their service. My guess is that it won't be long before there are many more 3rd party Google applications, bringing in a lot of new money to Google's coffers. Anyone for a BUY rating?

Re:Web index as revenue generator

[SilentChris]

"I think it's a fair price."

Any investment analyst will tell you that it's far better to have numerous low-priced shared than a few high-priced ones. At this price, a moderate investment (let's say $10,000) gets you only about 100 shares. That means you're completely at the mercy of the stock price (which we know to be oh-so-stable in the tech industry).

No, what'll be interesting is to see what mutual funds grab onto Google as part of their portfolio, and at what percentage. We know it's "risky", but is it considered growth? What percentage will make sense in a mutual fund? 5%? 25%? Those are the questions I'd like to see answered.

Re:Web index as revenue generator

[SunPin]

The Internet is going to be around for ever

Isn't that what they said about the Titanic? Hubris has a dramatic way of destroying things. Google could suffer the same fate at this asking price. Pets.com seemed like a really cool investment in its day. Same goes for Dr. "kung fu" Koop.com.

The Internet itself will die soon for a variety of reasons (spam, peak oil, Super bugs, the Apocalypse). Just don't be disappointed when it happens.

Re:Web index as revenue generator

[Jahf]

We already know that Google has been in spats in the past for indexing protected sites and providing ways to get around them.

I think if I were running such a site I would see about creating a system whereby if I saw Google coming in I would give it 25% of the content (which means the majority of the keywords needed for good indexing will have been sent out) along with a "please click here for more" link.

I personally don't -like- that kind of stuff, but that is not my point ... such services are missing out when they completely block Google from indexing them.

Besides, how many -useful- sites protect there content? I'd say that they are in the small minority today.

Re:Web index as revenue generator

[Jahf]

Take a look at the past ... Cobalt, VA, Red Hat all skyrocketed to this price level after their IPO. The only people who got the opening price were friends of brokers and the companies didn't see anything past the opening price. Yet they still changed hands readily throughout the day at those prices.

I don't think there is any question that all the shares will sell. If they don't change hands after selling, Google isn't going to care as they will still have raked in billions with this price instead of hundreds of millions with a lower price.

Is it actually giving anyone a -break-? No ... this price is no more friendly to the casual buyer than those other IPOs (well, not true, a couple of those went far past the $135 mark on first day so it is a boon there). But it is no less friendly to that investor either.

The difference is the brokers and their friends don't get an immediate cash-cow, they're on the same playing field. If I can't get a break, at least I know that the rich dudes didn't either.

Re:Web index as revenue generator

[julesh]

Actually, the Titanic cut a fairly serious corner -- they didn't have enough lifeboats for all the passengers.

That's a biggy.

A bit steep for my tastes

[Anonymous Coward]

Seeing as Google is everyones darling child now, and they have had much coverage over their cool technologies and decent methods of doing business, it looks to me like a bad buy. In other words, the price can only go down.

IANAstockbroker, and i have no money to buy stock anyway.

Share price is irrelevant

[gorbachev]

The price of a share is irrelevant. What is relevant is how much of the company you get for buying the share, and how much the total value of the company in question is.

All other things being equal, 10% ownership priced at $100 is a somewhat of a better deal than .00001% ownership priced at $100.

Re:Investors or the public?

[Dr. Bent]

I am still keeping my fingers crossed that they can remain faithful to their customers

Oh, you mean the people who advertise on google? Yeah, I think they'll do a good job of keeping those people happy. But people who use google's search engine just to find stuff are not customers...they're the product. Google main business is not selling search results, it's selling eyeballs. Just like any other media company (television, radio, etc...) who's job is to sell advertising, google's customers are the people who pay for advertising. When you start paying google to do a search, then you'll be a google customer...until you're the product.

PE (Price/Earnings ratio) is the number to look at

[gtoomey]

With second quarter earning of $78M, and a projected market cap of $36B, the PE is 36000/(78*4)=115.

With a PE of 115 Google is an expensive stock & I guarantee Warren Buffet won't be buying at the price. By comparison banking stocks have PEs generally under 20.

Analysts (and I use the term loosely) try to spin these high PEs by claiming there will be high growth, and using Price Earnings Growth (PEG) models.

I won't be buying at that price.

Meaningless Valuation

[Frobozz0]

I'm sorry, were you talking about people's fixation on stock price, horsepower, or MHz? :-)

The world is filled with meaningless measurements that are usually pushed by those that benefit from everyone else's ignorance.

Sad, but true.