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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.
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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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
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.
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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?
Open an account with a participating broker.
That share price is nothing compared to Berkshire Hathaway. It's not the share price that matters, but the earnings per share ($5,190 in the case of Berkshire). A higher stock price is justified if earnings are high and have growth potential.
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.
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.
It's Probably Overpriced and it is.
and 51% accumulation would mean a hostile takeover.
No. Sergey Brin and Larry Page have Class B shares with 10 votes per share, and they own a third of the company.
This means that, assuming you want to have to get as few Class Bs as possible, you would need to own 100% of the Class A shares, along with 40% of the Class B shares, which are not for sale, I might add.
Good luck on that hostile takeover.
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Google is only offering a tiny fraction of the ownership in this offering. If they raise $2 billion on a market cap of $36 billion, they've only let go of 5.5% of the equity.
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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).
can i use froogle to find a lower stock price?
[n8.r0n] http://petesweb.spymac.net/
It was a bidding system. Google said, "Hey, guys, we want to sell 26.4 million shares. How much would you pay for 'em?"
People wrote in bids and the amount they'd buy at that bid. Google took the highest until they'd sold all 26.4 million shares.
So the answer is, because someone was willing to pay that much.
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.
The market cap will be over $36B, with most of this is being the current owners.
PE is 115 as per my other post.
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?
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.
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