Fool.com published an article tonight on MarketWatch technology columnist John Dvorak who argues that Google may trade in the next few year for $20,000 a share.
The article looked at the growth of Microsoft shares which have increased 200% since it went public.
The reasoning goes if Google shares would follow, then its IPO price of $100 in 2004, would eventually reach $20,000 a share (assuming no splits along the way).
However if Google ever reached $20,000 per share it value would be $6 trillion dollars, “”only the U.S. and the European Union produce more in gross domestic product annually.””
It’s an interesting article which you should check out.
That article was so bad.
The two most glaring errors in it are:
1) Microsoft’s IPO price made it a small cap company. I forget the exact market cap now off the top of my head. Google IPO’ed with a market cap of $30 Billion. At that time, Yahoo, an established company for 10 yrs was at $40 Billion.
2) They mention Google’s future market cap of $6.3 Trillion based on the $20K stock price and then compare it to GDP of the US and the EU. Market cap is the value of a company’s total outstanding shares – a measure of the total worth of a company. GDP is a metric of total production. They are apples and oranges.
The comment by Tony points out 2 fiscal errors, but more importantly, the numbers simply dont add up – if something increases by 200% it has trebbled, not been multipled by 200 !
100% increase on $100 = $100+ so total = $200
200% increase on $100 = $200+ so total = $300 NOT $20,000
maybe the article author needs to go to school and learn simple Math before making stock predictions…
I refuse to believe it will go above $15,000 a share. 🙂
Seriously though, if G ever gets that big you can bet the Gov’t will want to tear it down just like Microsoft.
That Dvorak guy is an idiot. I’ve read a number of his columns. He complains that wifi costs should be regulated, too.
Dvorak has finally lost it. Microsoft went public in 1986.
How many people had a computer in their home in 1986?
What were the valuations in the tech space then, as compared to now?
I can’t believe he actually published this. Wow.
I have an open bet with anyone that wants to take it.
$20,000 says Google will not reach that price from this day until the last day of 2030.
And to Rob G, I think it was supposed to be 200x and not 200%.
Typos and fatal errors in logic and fundamental business principles. My cousin in high school can do a better job than this article.
Would someone please tell Dvorak he missed April Fools by more than a few days.
Sheesh.
It’s dementia that’s finally settling in.
In case of some huge USD inflation lasting for a decade it might reach that value.