Purchased a bit more today @ 107.50…
tecmo
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Please give me drop dead price and WHY
PE is useless here given the spend
THANK YOU
Please give me drop dead price and WHY
I am not sure what “drop dead price” means.
PE is useless here given the spend
I don’t know if PE is useless, I have provided valuation ideas in the past based on a variety of metrics.
tecmo
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Would love to here more on valuation in light of blood bath today
Would love to here more on valuation in light of blood bath today
The stock price was down around 3% yesterday, this type of move is not uncommon. I certainly wouldn’t characterize it as a “blood bath”. The stock price is down around 30% from its high, which is unusual however.
As for valuation, one of the inputs I use is price to sales. As you mentioned, GOOG is able to turn their profit dial as they adjust their internal investment levels. Margins have been very high lately, but its not clear they have hit their peak.
On a P/S, the range most common has been 5x to 8x TTM Revenue. It is under the low end of the range right now. I have TTM revenue at $282B, and the market cap at $1,360B which get you to a 4.8x multiple.
If we start to look forward, we might see revenues hit $300B by year end, and if multiples recover to say 6x the implied market cap would be around $1,800B, or around 30% higher in say the next 9-12 months. So one might expect that we will see a stock price in the range of $120 - $140 by next spring.
Note: The mid-term downside seems pretty limited (in the very short term the stock could drop even more, but I would be VERY surprised if the stock was under $100 / share next spring.
tecmo
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2 Likes