Google @ $400: Now What?

By Dr. Duru

November 8, 2005

The Google excitement has continued nearly unabated since the company reported earnings a few weeks ago. Two weeks ago, I used logic from the bubble days to generate a $400 (actually $396) price target for the stock. Yesterday, GOOG hit an all-time high of $397.47 and today it made its first clear downward stroke since mid-October. While I was pretty confident that the market would deliver the goods on GOOG, I was thinking of a two-month timeline and NOT a two-week timeline! Now that we have hit my magic number, the stock has finally begun to look a bit toppy.

At this point, I am not willing to predict that Google has achieved its tippy top. Google still has plenty of business momentum, journalists are churning out articles on the company with breakneck speed, and it seems the entire media industry, even the digital world, trembles at the very thought of the Google juggernaut. But alas, this is the world of tech - a world rife with stiff and vicious competition. Sooner or later, envy and greed will replace fear, and Google's competitors will nibble away at any competitive advantage they can snatch. The story will be closer to the end than the beginning when we begin seeing major competitors join forces to take on Google. Until then, even at a $109B market cap, you probably would do well not to bet against Google! And either way, be careful out there!

DrDuru, 2005