Multiples compression has brought stock price of Google to the first stop pit at USD435. Now recession fears will make its way in compressing it further to USD326:
"Finally great company has missed even greater expectations, more analyses will come later, but for now it is apparent that all financials have deteriorated further: growth rate sliped at fastest pase ever. FCF in last year was 3.4 bil USD. Multiple at closing at USD564 FCF/MC (176.5 bil) was 51.9, compared to yahoo around 20. Recession will eat hard into Google revenue growth, CAPEX will hurt FCF further in 2008. Multiple of 50 Free Cash Flow to Market Cap is not sustainable any more, expect first stop at 40. It is 40*3.4=136 bil market cap, stock price USD435. With further recession fears multiple of 30 will come into play (50% over Yahoo!). It will reflect in stock price of USD326. On the Technical side stock has broken crucial uptred line on weekly bases. Technical signal SELL which has been reported here 2 weeks ago now confirmed by fundamentals."
http://sufiy.blogspot.com/2008/02/google-goog-web20-bubble-is-bursting.htmlHenry Blodget is on the same page with that analysis here:
http://www.alleyinsider.com/2008/3/_google_to__350_
No comments:
Post a Comment