Google 600, 2000, 4000

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Andy Kessler, who made his bones with Wall Street Meat, a book that skewered people being welcomed back by John Battelle sums up the current silliness around Google’s price targets in his latest post….

Ah, price targets are back in fashion. And stupid investors will fall for them again. It’s what we do on Wall Street while we wait for real news. Analyst Safa Rashtchy at Piper Jaffray made a splash with a $600 target on Google. Not to be outdone, an old competitor of mine, Mark Stahlman (is he still at it?) now at Caris & Co., declared Google will hit $2000, or about a $650 billion market cap. Yeah, maybe.

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wireless

The ironic thing is that these same proclamations of bubble redux were being made at the IPO, which in retrospect was ridiculously UNDERpriced. Even now, just using consensus street estimates, Yahoo is more expensive than Google at 57x ’06 EPS compared to Google’s 54x. Hell, Amazon is trading at 52x! Rarely are articles written or comments made about how “expensive” these stocks are and yet Google is growing 3-4x faster than both with MUCH higher margins. This is how money is made on Wall Street when it is “obvious” to everyone that a stock is too expensive chances are its too cheap.

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