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Friday, November 05, 2004
Is Google Overpriced?
Conventional Wall Street wisdom is that Google is a bubble stock, way overpriced at $170.65, but no one wants to be the one who didn't make money on the stock. Wall Street seems to be coming to its senses. After briefly pushing Google over $200, it is now a little more reasonable thirty dollars cheaper. Business Week's Ben Elgin argues that there are very good reasons for Google to be so expensive. He notes as factors the surging search market, the fact that Google recorded record revenues and beat analysts expectations. Google apparently trades at 55 times its expected 2005 earnings, while on that same scale, Yahoo trades at 76 times and eBay 63 times. Google's market share has risen from 41% in March to an estimated 49% last month. Google's stock seems to be settling into a more reasonable area, but expect it to rocket up again briefly in January when the next quarterly report comes out.

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