I hope Google won't go bankcrupt. If that's the case, i might lose my earnings too. They have supported me alot. Keep it up!!
CoryS
· 1 year ago
Assumes status quo, Fred. Thinking back to the last 2 recessions, some of the then current titans (e.g. MSFT, IBM) came out of the recession to face completely new or resurgent players that became new titans. e.g. MSFT from 2000 to now is part of the lost decade (on track to generate $17B+ in 09 income). IBM from 1991 to 2000 was an equally poor performer relative to the NASDAQ. Contrarily, I'm not sure that Apple was viewed as a titan in 2000 worth putting a lot of money into, but has had a phenomenal run.
Recessions change status quo and players with new business models have taken advantage of those times to realign the value chain in ways we're not looking at from today's prism.
Mark
· 1 year ago
Don't expect GOOG to re-emerge from the downturn as the powerhouse it once was. I'm not saying its days are numbered by any means, but the glory days are certainly a thing of the past. The only way we'll see GOOG go back to pre-crisis levels is if they make a major, systemic change (i.e., acquire another major player, etc). Otherwise, I'd say it's low on the list of value opportunities. With that said, though, we're getting near a point where long-term investors will need to start positioning themselves for value opportunities. Needless to say, valuations are cheap but that doesn't mean timing the market is any simpler.
TMC2K
· 1 year ago
As stated before, it really would be much safer and more profitable for you to sell puts during a downtrend. There are also ways to put the odds in your favor that we are actually near a bottom before you risk so much. We may be near a bottom but there is no way to know that for some time.
As for GOOG. I don't invest based on multiples but I thought those who did needed to justify 10x valuations with 10x growth.That is real hard to see anytime soon.
Fred, any thoughts about Goog buying FaceBook and Amazon? I'm with you on Apple, and believe that aapl emerges from the downturn as a tech mega force as a result of the iPhone's domination and having $25B in cash to deploy during. It's a question of when for aapl, not if in my mind.
Goog needs to combine the meta data from Facebook with it's own collected info to help target the consumer better when they show up at Amazon. The FaceBook meta data is super valuable but not while you're using FaceBook. Zuck and the FB management need to figure this out and hitch the train to Goog ASAP. Goog spends $2.5B in stock on FB and buys amzn for a combo of stock and cash. Do you think this makes it by the regulators?
fredwilson
· 1 year ago
I don¹t see it happening that way to be honest. There¹s not a lot of love between facebook and google. I think if facebook is bought, it¹s bought by microsoft
Steve Frechette
· 1 year ago
That's too bad. Msft's biggest problem is itself and buying FB would virtually kill the FB mojo. The msft brand is poison. Can't see that deal working out unless they spin out all of the web properties as a separate entity that can distance itself from the Monkey Dance in Redmond.
Maybe FB and amazon then. At some point, amzn has to take off the gloves and realize that they're basically a shopping search engine that has to go head to head with Google, or merge with them. Amzn is making more cash by referring buyers to the partner sites vs fullfilling the orders internally. That puts them on a collision course with Google. Imagine the targeting potential of combining the meta data from FB with Goog and amzn.
barney
· 1 year ago
what about a potential alliance between msft, fb and amazon? all are allles (for the most part) and could work together to seriously hurt google - their common enemy.
michaeldowns
· 1 year ago
I would normally agree w/ you, but I bought GOOG last week which is a sure sign that everyone else should start selling.
fredwilson
· 1 year ago
That's how I feel about my stock trading too
cv
· 1 year ago
Basing stock decision on earnings: Big Mistake.
tjsweeney
· 1 year ago
hmmm, if you go with a dcf on the $10.8b of ebitda, it's reasonable to argue for a pre-cash $216b valuation on fcf. this is, of course, two times the $108b @ 10x ebitda.
I agree that Google seems relatively inexpensive but I don't think that EBITDA is a great valuation metric for a company like Google because it assumes that depreciation is not an economic cost. This is inaccurate as Google's expenses to replace servers will likely remain high for the foreseeable future, albeit likely at a lower rate than the $2.4 bil. that GOOG spent in 2007. In my view free operating cash flow is a much better metric. Enterprise value to Free operating cash flow (defined as TTM operating cash flow minus capex) is approximately 17.5x which seems relatively inexpensive given Goog's growth rate. Nevertheless, the company may face increased competition from Microsoft and Yahoo going forward.
Richard Townsend
· 1 year ago
I realize the current economic situation will be a big blow to GOOG's value however I think they have a bigger problem. I was recently writing and article on the effects of the recession (and other recessions) on unemployment... needed some dates. Because I'm a bit old can't remember the dates (years) of the recessions/credit crunch's I've been through. Now was it '79-80' or '82 hmm... stock market crash 71-72? I typed into Google "History" "Australian", "Recessions", "Years". Nothing useful at all... just the clutter of the current recession headlines with all the obvious big name sites popping up.
I could quote other examples however I feel whomever is building their search ranking algorithm seems to have lost the plot lately... unsatisfactory profit driven search results rather than information satisfying search results leads to dissatisfied customers which leads to a search for alternatives... leading to less income and lower stock prices. Yahoo must be rubbing there hands together, in-spite of their (Yahoo's) obvious 'problems'.
Ric
CEOmike
· 1 year ago
The problem with the google type of tech stock is "technology cracks" can bring it down real quick. There is one brewing at google.
Want to make a lot of money with adsense? Put up an adsense page focused on keywords with high PPC values. Get a whole lot of free or cheap hosting accounts. Write a script to run from each of these unique IP addresses to go to the adsense page and click a couple of google PPC ads then have it go to sleep for three or four months.
This fraud is google's "dirty little secret" There are thousands of hackers doing this now! I can think of no way for adsense to work and protect against this kind of click fraud. If advertisers start to wonder where their money is going and the media catches on to this without google demonstrating how they are preventing it - there will be mass exodous from google.
maverick
· 1 year ago
As a fundamental analyst, you are making a poor stock choice, in a poor market environment.
Even with the emotion in your writing, you truly have no confidnece in this purchase,. because you and every other US citizen truly believe the market will always turn around. It's just not going to be that way this time around. Thje forex market and stock market is telling us this bear market will stay for many years
you say" I think" way too much in your analysis, it tells me you are uncertain in your thoughts.
I am a trader of 10 years, and I know for a fact these markets have a long long way to fall.
Listen to me very carefully.. you are all making a huge mistake buying Google.. big mistake!
All Comments
Recessions change status quo and players with new business models have taken advantage of those times to realign the value chain in ways we're not looking at from today's prism.
As for GOOG. I don't invest based on multiples but I thought those who did needed to justify 10x valuations with 10x growth.That is real hard to see anytime soon.
Here are some things I'm watching in today's daily investment post.
http://blog.thommccann.com/2008/12/a-big-market...
http://www.covestor.com/mbr/fredwilson
especially when compared to the leaders:
http://www.covestor.com/rankings/portfolio?show...
Goog needs to combine the meta data from Facebook with it's own collected info to help target the consumer better when they show up at Amazon. The FaceBook meta data is super valuable but not while you're using FaceBook. Zuck and the FB management need to figure this out and hitch the train to Goog ASAP. Goog spends $2.5B in stock on FB and buys amzn for a combo of stock and cash. Do you think this makes it by the regulators?
between facebook and google. I think if facebook is bought, it¹s bought by
microsoft
Maybe FB and amazon then. At some point, amzn has to take off the gloves and realize that they're basically a shopping search engine that has to go head to head with Google, or merge with them. Amzn is making more cash by referring buyers to the partner sites vs fullfilling the orders internally. That puts them on a collision course with Google. Imagine the targeting potential of combining the meta data from FB with Goog and amzn.
(simple assumptions: ebitda ~ fcf; 5% perp growth; 10% wacc...)
I could quote other examples however I feel whomever is building their search ranking algorithm seems to have lost the plot lately... unsatisfactory profit driven search results rather than information satisfying search results leads to dissatisfied customers which leads to a search for alternatives... leading to less income and lower stock prices. Yahoo must be rubbing there hands together, in-spite of their (Yahoo's) obvious 'problems'.
Ric
Want to make a lot of money with adsense? Put up an adsense page focused on keywords with high PPC values. Get a whole lot of free or cheap hosting accounts. Write a script to run from each of these unique IP addresses to go to the adsense page and click a couple of google PPC ads then have it go to sleep for three or four months.
This fraud is google's "dirty little secret" There are thousands of hackers doing this now! I can think of no way for adsense to work and protect against this kind of click fraud. If advertisers start to wonder where their money is going and the media catches on to this without google demonstrating how they are preventing it - there will be mass exodous from google.
Even with the emotion in your writing, you truly have no confidnece in this purchase,. because you and every other US citizen truly believe the market will always turn around. It's just not going to be that way this time around. Thje forex market and stock market is telling us this bear market will stay for many years
you say" I think" way too much in your analysis, it tells me you are uncertain in your thoughts.
I am a trader of 10 years, and I know for a fact these markets have a long long way to fall.
Listen to me very carefully.. you are all making a huge mistake buying Google.. big mistake!
http://www.learntotrtadethemarket.com