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Google Slashes IPO price
Hungry Student writes "In breaking news, Reuters and the BBC are reporting that Google has reduced the price of its IPO to between $85 and $95 per share from $108 to $135 per share. Google shareholders are also reducing the number of shares available for sale by 6.1m to 5.5m. The total number of shares available is currently 14.1m."
Future successes in any of these businesses could make Google's current price seriously undervalued. And if some key ones fall through, it will have been far too high.
I was hoping Google would come off their high horse. They aren't Microsoft, in fact, I don't even think Microsoft stock is running that high (no I didn't check, and no I am not checking). Don't get me wrong, I'd love to own some Google, however, I wasn't paying that much for it.
From the article:
"The company may face fines if the SEC finds that the share issue was contrary to stock market regulations."
How much is this tied to the decrease in price? Also, did the interview with Playboy have the negative effect analysts anticipated?
At this hour, nobody really knows how much Google as a whole is worth. That's the whole point of this Dutch Auction system that hasn't quite finished being played out yet.
Once Google's on the market, we'll be able to multiply the share price by shares outstanding to get a "market cap" number that'll be an approximation of Google's total value... but clearly an indicator that'll be bouncing that fast can't tell us too much info perfectly either.
Sure, we'd all want this to be simple, but nothing ever is on Wall Street.
Rather than buy shares, i've placed two bets on it: Opening price below $110, and close UP on 1st day. If the price is down because the institutions aren't buying into an auction that deprives them of big fees - as the conspiracy theory says - then the price should move up as they start buying in at the lower price...
Now look where it's stock is sitting. So basically GOOGLE is way over priced. People who think they will GET IN ON THE GROUND FLOOR of a big bucket of money, are just plain wrong.
I think it's pretty pointless to buy Google stock anyway... It's not like you're getting in on the ground floor of a penny-stock IPO. It it was a small company selling out stocks to get investment capital it would be different. With companys like Yahoo and Cisco no one knew how big they were going to become. So when they did make it big, the stock you bought for a penny ended up being worth hundreds. Google is already big, so the only instant millionares to come of this will be the people who work there.
I'm just waiting for the inevitable showdown between the "Do No Evil" motto and "responsibility to shareholders" battle that will eventually play out.
There will be a point where these two will collide, and it'll be interesting to see the result.
Well, now we might be splitting technical hairs. By adjusting a previously flawed calculation of mine, we know the PE is somewhere in the range of 100+, but now Google has a 25% discount (roughly) with the new price goals, which brings it to about 70.
Most people can tell you that at that point, the shares are certainly overvalued. If prices still sell at that level, people are buying. That doesn't mean it's overpriced to the market.
I could buy a can of RC Cola for $50. That might be fine to me (I'm independently wealthy* and very thirsty), but most people won't pay more than $0.50-1.00 for it.
Psst. Here it gets non-technical.
That being said, I have made serious considerations into purchasing Google stock, just so I can start calling it "My Search Engine". As of today, it said it is searching 4,285,199,774 web pages. If Google's shares total about 264 million, that means each share gets to search for a 17 webpages. If I get 5 shares (or whatever the minimum is), I have "search ownership" of 85 pages, and growing! You can bet if I win** some shares I'm going to start staking my claim, and you should too!
Example: This webpage searched by Google thanks to R. Johnathan Prescott.
Then I know that if people search for sweaty men on Google, someone might click-through to their ad. That means I get $0.0000000002! With my 85 pages that I own, I will stake an ad campaign in mainland China. If everyone sees it (1.3 billion people! or 2.59999 bn eyeballs!***), and everyone clicks through, I'll demand payment for that myself, and get...
$0.26 richer!
Then I will go the grocery store, buy a $0.25 piece of candy, and strangle myself with the bag it came in.
Why do I want to buy Google?
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* Sadly, no.
** Best to think of it as buying lottery tickets, your outcome will probably be similar.
*** Discount sinister Chinese bond villains with eye patches and others.
Small potatoes make the steak look bigger.