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Google's Share Prices And The Markets Crisis

By  Nov 20, 2008

Topics: Programming, C/C++

If you've invested in Google's stock, this is bad news for you. However, there is a brighter side to this, and no, it isn't Schadenfreude.  I'm looking at it in a more rational way: the only way to recover from a bubble era is to let the bubble burst and allow sanity and reason to come back to the markets. This is the case in real-estate business; it's just as true in the IT sector. Once Google reaches a realistic price, this will indicate that sanity has returned to markets. Why am I picking at Google? Because Google is the flagship of the Web 2.0 bubble. It plays a similar role to that of Amazon and eBay in the bubble 1.0 days.

What is a realistic price for Google's stock? I wouldn't leave it to financial experts to decide because you know what their forecasts are worth. Instead of relying on analysts' wishful thinking, take a look at sustainable, profitable IT-related companies such as Amazon, eBay and Microsoft. Their share prices are somewhere between $12.00 to $35. That's where Google will eventually find itself. "But wait a minute, Google has Android! Gmail! And it runs the world's only Web search engine!" some folks will say. That's right. Google I a monopoly in the search engine arena but this is where it all ends -- it's just a search engine; not a machine that generates the oxygen we breathe nor is it a solution to the global energy, global warming or global-whatever crises. After all, eBay and Amazon also have unique positions; 8 years ago, experts were still convinced that their positions were so unique that their share prices were worth $200 and more. I can also mention Oracle ($16 as I'm writing this post, ) and even Sun ($3.27, a sharp decline from the peak price of $233 in August 2000).