Latest InsideMicrosoft Posts: InsideGoogle: Google Catches Up To Yahoo .comment-link {margin-left:.6em;}
Monday, October 11, 2004
Google Catches Up To Yahoo
Google's shares are now worth as much as Yahoo's, Internet News explains. When Google went public, analysts were calling it a bargain compared to Yahoo, its closest competitor. Now, thanks to 59% growth in share price (compared to 20% from Yahoo over that same period), Google and Yahoo are worth the same. Analyst Mark Mahaney says, rather bluntly:
"GOOG's recent share price rally now leaves it trading at no material discount to YHOO ... and we believe a discount is warranted."
Ouch. I disagree with the assertion that Google is due for a correction. Yahoo may be a more mature and diverse company, but as the internet search leader, Google has a much larger potential upside.

More potential for an upside? Not according to this article in Net Stocks part of CBS Marketwatch.

Per the article:

Mark Mahaney, an analyst at American Technology Research downgraded the newly public stock to a "sell" from a "hold."

Mahaney suggested investors trim their Google positions in advance of the Yahoo (YHOO: news, chart, profile) report that comes out late Tuesday and before Google reports its results on Oct. 21. At the same time, Mahaney said it's a good time buy Yahoo shares.

Why this tactic and why now? At current price levels, Yahoo has more upside potential and less downside risk from current prices, according to Mahaney. On the upside, both companies will benefit from a surprisingly healthy quarter in the paid-search business.
Ah, that article has most of the same information as the article I linked to. I disagree with Mahaney. I think Google may be more risky, but no one ever got rich by not taking risk. Google is a risk, but the potential upside smells too good not to have a taste. You stand to win big with Google, not Yahoo.

Tomorrow should be very interesting, as Yahoo's earning's report comes out. We can compare that with Google's first ever public quarterly report, coming next Thursday.
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