Google Is Worth Every Cent of its $741.79 Share Price
$231.54 Billion dollars? $741.79 per share?
Most people look at those numbers and their gut reaction is to pan Google and call the stock overpriced, with absolutely no basis for their valuation. "It just looks high" is what would be going through their minds. The thing is, I can easily justify a valuation in my own mind of half a trillion dollars for Google. The company is just that important.
To start with, they are THE destination if you are doing any kind of online advertising. Sure, you can use Overture and Adcenter as well, with a number of other smaller PPC companies, but they are always used to supplement Google's traffic. Ask any serious affiliate marketer and they will tell you that Google is their number one choice and where they spend more of their money. Their Adwords user interface is by far the best, and it's not even close.
So Google dominates the online advertising market, and the gap grows daily. They have so many ways to raise money and so many shares to use to purchase companies that they are interested in that it isn't even fair. Youtube? Doubleclick? A drop in the bucket for Google. Their total valuation dwarfs most other companies, and they can simply pick and choose which companies that they want to purchase.
Further to that, the company has built up a great name for itself in the business world. They aren't "evil" like Microsoft used to be seen as. Who wouldn't want to be purchased by Google? They are massive but they have done it the right way.
Add to that the fact that the company absolutely prints money and shows no sign of slowing up. They are so flexible that they can enter any market and practically dominate from the get-go, and leave competition shaking in their boots. It is just a matter of time before newspapers and radio stations outsource all of their ad sales to Google. You may laugh, but it's coming. For struggling industries, trimming expensive sales staff and outsourcing to Google will be one of the first moves that they make.
Add to this the ridiculous amount of money that Google makes through their Adsense program. Read their financial reports and their numbers are just astounding. They have no debt, their cash on hand is growing by the day, and they have more share capital on a daily basis with which to purchase companies that they are interested in.
Google is going to be THE advertising company over the next 10-30 years. Internet, radio, newspaper, magazines, even TV eventually - Google will have their fingers in it all. A couple hundred billion seems inexpensive to me.
Filed under: Internet Companies | General Knowledge