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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.
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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.
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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?
'I'm Feeling Lucky' takes on a whole new meaning.
The government's moral compass is controlled by GPS.
In times of crises, they alter it to suit their needs.
It's the end of the world as we know it.
It's the end of the world as we know it.
It's the end of the world as we know it and I don't feel fine...fine...
While I love the idea of Google raising money for its business I am still keeping my fingers crossed that they can remain faithful to their customers rather than the random whims of their investors.
Who will actually be able to even buy it at that price when it hits? Most people probably wont be able to get the stock until its even higher. How does one go about getting a stock at its IPO price?
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.
Will going public affect google at all in terms of service, and their search algorithm? Investors won't get higher returns in searches will they?
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GOOG as stock ticker looks wierd, I would have preferred GLE
Karma: Good! Napster: Baad!
Does anyone find it ironic that this story is a Yahoo story?
They may also start leveraging the success of popular services that use their Web APIs , such as Google Alert and Copyscape , particularly with the commercialization of Google Alert. Positioning themselves as a general technology platform for the web is surely a step in the right direction to further raising their valuation.
Will be interesting to see how quiet they stay from now till the actual IPO...
story about underwriters crying about the whole auction process and fear that price will be so high that market collapses after. Given their idiotic pricing and occaisionally illegal distributions in dot bomb ipo's, why should anybody take them seriously? Of particular note is that they are being paid significantly less than a standard IPO.
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.
.00001% ownership priced at $100.
All other things being equal, 10% ownership priced at $100 is a somewhat of a better deal than
In Soviet Russia, I ruled you
can anyone not see Google doing extremely well in the near future? They maybe expensive but for the next say 5 years they will rise in value and be a pretty safe bet... but after that I dunno, Google is doing evetyhing now but will it still in the future or will it pull a microsoft and go "We're at the top, hello minions do as we say"
I like muppets.
Their opening bid is high, and they will bring the price per share down until there is a buyer. At that point, everyone else will buy shares at that price. I think their price per share will be in the 50-60 Dollar range.
Pete Carr Owner Chatmag.com
IANAFinancialAdvisor, but I expect the price to slip below the opening price probably three weeks after the IPO and then settle to a more realistic price. I for one won't be participating in the IPO and have recommended that my friends wait and watch instead.
we see things not as as they are, but as we are.
-- anais nin
With a high IPO like that, going 'short' after a couple of weeks might be a good strategy. The market is not stable and many outside influences (energy costs, Iraq setbacks) could easily drop 10% out in a day.
A bigger drop will possibly happen around election time. Whether irrational or not, Democrat wins tend to drop the market initially.
*NOTE* - the above statement is not my political preference, just an observation of how the 2k2 elections were referenced in the same manner
Consider 2 businesses of equal value doing IPO. One creates 1000 shares, and sells them for $10 per share. The other creates 100 shares and sells them for $100 per share. Which is the better deal? Duh! it's the same deal (essentially).
In this case, it appears Google is (or thinks it is) selling "large chunks" of the company. They could offer instead 10 times as many shares, for only $13.50 a piece. Maybe this would be smart. It apparently would suck in a large number of Slashdot readers!
And this crowd is supposed to be math-sci literate! How depressing... I think I'll go off and cry about the poor state of the nation's youth now.
It's Probably Overpriced and it is.
Why not sell ten times as many shares at a tenth of the price? Is it deliberate to keep out smallish investors?
I find it difficult to believe that this stock price can be maintained
You mean the market capital of Google wont be able to maintain that price right? The Market Cap = the Stock Price * the Number of shares; therefore, the stock price alone dosn't mean reflect the value of the company.
According to the article; Which you're correct the market cap of BA is 39.80B and Google wont be able to keep that for long.:
WASHINGTON (Reuters) - Google Inc., the world's No. 1 Web search provider, said on Monday it hoped to raise as much as $2 billion in its highly anticipated initial public offering and could have an initial market cap as high as $36.25 billion. About 24.6 million shares will be sold in the IPO for between $108 and $135, according to an amended prospectus filed with the U.S. Securities and Exchange Commission (news - web sites).
What difference does the price of the stock actually make? Isn't $1000 of Google the same regardless of how it's divided up?
Visit the
can i use froogle to find a lower stock price?
[n8.r0n] http://petesweb.spymac.net/
If people are smart they will realize that Google isn't the one who sets the price. Due to the Dutch auction format it's the investors who set the price.
In Dutch auction you take the highest price and count down the number of shares till you run out. The last person to be issued shares at the lowest price is the one who sets the price for the *entire* auction. Everyone gets their shares at that price. So if you believe that Google is overvaluating their stock then what you need to do is pursaude the majority of those purchasing the stock that it should really be *insert fair market value* for the stock.
Personally I think the stock is worth about half of what Google said, but I am not a professional nor do I claim to be.
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.
It's just a search engine. There are plenty of those. This stock will be trading at a fair price in no time at all. .... $4.50.
The government which is strong enough to protect you from everything is strong enough to take everything from you.
Historically, yes. Democratic wins tend to have a negative effect on the market. Likely this time? no. The reason is that usually Democrats are spenddrifts and Wallstreet doesn't like that. This time however, the Republican is the big spender and Wallstreet does not like a combined budget and trade deficit. Big government combined with tax-cuts is lethal. Republican victory this time would probably mean a big drop of the market as four more years of this policy could kill what's left of the economy. The Democrat couldn't conceivably do worse (though he might surprise us), so I would expect a reversal of the D/R reaction this year.
Far more growth potential, but also somewhat potentially more instability. At least with American companies, investors have a very good idea of how the market works, the laws, etc. In China, for example, how is an investor going to know if a law or local incident is going to cause market jitters?
For unknowledgeable investors, I'd say stick to the U.S. market. Far east investments have more "risk" in them, simply because it is not your home turf. Don't invest in something you don't have a clue about (Peter Lynch, among others, have said that).
This is the only post I've seen with anything close to the information needed to make a purchase/no purchase decision.
The market cap will be over $36B, with most of this is being the current owners.
PE is 115 as per my other post.
Still pretty high. Comparing to banking stocks is silly though, since Google is not a bank. Comparing to other internet stocks is more informative. Yahoo trades at a PE of 110. Ebay trades at a PE of 78. Amazon trades at a PE of 60.
Google's price-to-sales ratio (@ $108/share) would be 10.35. This is lower than Yahoo's 14.35, eBay's 18.20, though much lower than Amazon's 2.71.
Google will be an expensive stock, but certainly in-line with other internet stocks.
For one, the $ value per share is irrelevant, because it totally ignores any sort of qualifying factors. Like P/E ratio, Price to Book, Float, Cash Flow, anything. Hell, what if MS only had 100,000 shares of stock, they would be worth 3,081,000 each. Most companies keep their stock prices below $100, to keep them more liquid and to appeal to a broader range of investors. Berkshire Hathaway intentionally keeps it's stock price High (illiquid - relatively speaking) in order to discourage speculation and such.
For those of you who don't know. Dutch auctions are only useful to the seller if the buyers anticipate a lot of people investing at the stated price. Pretty much describes Google here.
/. crowd that can afford to invest in them.
b iz.yahoo.com/ibd/040709/tech_2.html
Since the price goes *down* from there, Google is relying on a lot of (for lack of a better term) stupid geek-types to buy at the $108-$135 price. If you put in a bid at $75ish, you might still get shares.
What's nice about the Dutch auction is you get to pay what you think the shares are actually worth. If you pay at the $108-$135 range, you're going to be seriously overpaying and will be disappointed when the stock starts selling publicly at $85 by the guys that got a thousand shares at $75.
These are just example prices, but it totally rewards the people who bid lower and still get at least some of the stock whereas those that bid high get all they bid for.
It's kind of lame that Google is doing it this way, IMHO, because they will end up totally scamming some of their biggest supporters into paying such a high price. That is, some of those in the
Hope those of you that actually bid $135 think it's really worth it, cause you're most likely to be disappointed in the long run.
But to each his own. I could end up being wrong about it. There are articles about this stuff:
http://slate.msn.com/id/1002736/
http://
Basically, Google is ensuring that "insiders" don't get rich off of them, but that doesn't help *you*, the average investor, at all if you are looking short term and not long term.
I think by choosing Dutch they are looking for long term investors.
It really doesn't matter because the average investor doesn't know any better. This is the same reason that stocks go up when the company announces a stock split. The idiots eat these stocks up because they think that there's something magical about owning a stock through the split.
Let me preface this by saying I have a degree in Finance. I ended up in IT because I realized that's where my true passion was, but nevertheless I learned a lot of crap about stock valuation and stuff like this.
Although the parent poster was for the most part correct, there is a significant meaning to a stock split to an investor. When a company's management decides to conduct a stock split, there are sending a signal to the market that they have a high confidence in their stock price. Management does not generally split stock that they feel may drop in the future.
Investors then purchase the stock, thereby driving up the price, because this action (a stock split) signifies that management perceives some additional value in the company that the general public does not. And since a stock price is simply the market's valuation of the company (not the instrinsic value of the company itself -- that can't be changed by a split as the parent pointed out), the price goes up because the split means new information has been released into the market. All of this is predicated on the theory that management knows more about the future direction of the company than the general public, which hopefully is true.
So we've got about 24.6m shares. Profit per share is in the $11-15 range. The price per share is about $108-135. This puts the P/E ratio at about 7-12, which is extremely low. P/E Ratios are usually in the teens, and for .com IPOs have been in the 20+ range.
You're missing that the 24.6 million shares really only represent about 10% of google. Which means your math is off by an order of magnitude--instead of a P/E ratio of 7-12, you're looking at 70-120 which is not a good deal.
What part of "shall not be infringed" is so hard to understand?
Now would be a great time for me to direct you all towards this illustrated commentary: Google = Money
-JungleBoy
"You never know when some crazed rodent with cold feet might be running loose in your pants."
-Calvin
This has been going on for years.
This weekend I was looking for some software that would be used for live performance midi work under Windows. My goal was to control lights/lasers, but none the less I noticed when searching google most of the results were crap pages setup to rank high on google.
I turned to Yahoo's search, and found much better results with less fake keyword filled pages. This is the 3rd time recently I've discovered this.
Is google a victim of it's own success? I love the uncrowded google page, this is what attracted me to google in the first place. Now I'm starting to wonder what I'm missing by relying solely on google. Yahoo responded quickly, although the site is crowded.
Thoughts?
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ah, not just me then - I keep getting the unusual (for Google)
"Server Error
The service you requested is not available at this time.
Service error -27."
"we demand rigidly defined areas of doubt and uncertainty!"
The story: 108$ - 135$ The error... -27
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.
"Politicians find new names for institutions which under old names have become odious to the people."
I'm just thinking how often, if it's even legal, for a company to go out of its way to jeopardize a companies IPO. Take for example if MSN and or Yahoo! a few days before their IPO date if they filed (one or many) lawsuites for copyright infringement, IP reasons, SCO attacks because of licenses etc, or any number of things specificlly to bring down there sales of stock. Would this affect the interest that investors would have in the company? If so how much?
TruePunk | Games
what is relevant is not the stock price but the market cap. market cap, theoretically, should reflect net present value which is the summation of discounted cash flows over the average investor's investment horizon. One can take 10 years as the average investment horizon and I cannot imagine profits of google that will amount to that kind NPV. What people are betting on is not the fundamentals of the company but are betting on the stupidity (optimism) of the next guy. Pricing is being driven by supply and demand for a stock which is disconnected from the real value of the stock. Well who loses in the process it is always the common investor who loses as most small investors are either not savvy enough or a also betting on general euphoria. The sophisticated investors cover typically are better positioned informationally (insiders) to enter or exit the markets. Google or Yahoo or Amazon they (will) all come down tumbling when the bubble bursts. this doesnt make them bad businesses but bad investments.
Sergey Brin 962,226 shares
Larry Page 964,830 shares
the numbers don't mean anything to me in hex, but there has to be something going on... those numbers are just too odd (even) to be anything but deliberate. who sells 830 or 226 extra shares?
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