Webometric Thoughts

October 31, 2007

Google Shares at $700

Filed under: Google,share price — admin @ 4:13 pm

Just over three weeks ago, as Google shares passed $600, analysts were predicting that they could reach $700 next year. I guess this just shows that really analysts don’t know what on earth they are talking about. The markets are far too complex for anyone to really have an idea what is going on, we all just keeping making rather uneducated guesses most of which will turn out to be wrong, and those that chance on the right result will inevitably be thought of as geniuses.

I still think, as I did three weeks ago, that the Google price is over-inflated and there will be an inevitable crash. The only problem is, we just don’t know when. Whilst I previously said that I would sell at $699 and never look back, now it is at that price you have to think it must be worth hanging on until it reaches the inevitable predictions of $800, or $1,000. But there again the market always looks stable before the crash appears, and when the crash starts its too late to off-load.

Luckily for me the whole game is theoretical, and I can just watch from the sidelines, but if I was so rash as to make a prediction it would go something like this:

Now the $700 mark has been reached relatively easily, and the $1,000 mark is in the market’s sites, the market will go a little crazy until it reaches the $1,000 mark…possibly to coincide with Christmas. The price will then slow down and, given time to reflect, people will realise they have all got carried away. At this point people will try and sell their shares, unfortunately everyone will be trying to sell their shares, and the Google price will crash. The fear that they have overpaid will spread to shares in other Internet businesses, and those shares will also see a massive dip in share prices. It will quickly become known as bubble 2.0.

Obviously this is just one of a million scenarios, but it is always worth having a stab at what will happen. If you get it right there is a cushy job at the London Stock Exchange and you are hailed as a prophet, if you get it wrong then no one remembers anyway.

7 Comments »

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