Thanks to Roger for pointing out that Barron's is having an 'open house' from now until February 20th:
Barron's Online is holding an open house from Saturday, Feb. 11, to Monday, Feb. 20. That means you can visit the entire site for free anytime during that period. Just go to www.barrons.com.
This is perfect timing for all you Google bears b/c you can access this week's cover story -- Google Gets the Gong. The preview of this article on CNBC after Friday's closed caused the stock to drop to $351. Here's a snippet (emphasis is mine):
INVESTORS HAVE BEEN FIXATED on Google the past few weeks, as its shares have tumbled nearly 25% from a peak of $475 -- and the fact is, there could be a lot more tumbling ahead. The share price could well be cut in half over the next year as the Internet giant grapples with growing competition from Microsoft and Yahoo!, increased pricing pressures in its online ad sales and mounting concern about what's known as click fraud.Suffice it to say, there are those who disagree: Fans insist that Google (ticker: GOOG) is headed to $500, maybe even $2,000. But the list of challenges the company faces is nothing short of mind-googling. As if Microsoft weren't enough, the search concern is headed for brawls with content providers like newspaper and book publishers. Phone and cable firms may also join the fray. Google's cost structure, meanwhile, is ballooning, with the company hiring thousands of new workers and mulling projects as far afield as space travel. If Google trips on even a few of the challenges, its earnings could easily disappoint.
To get a sense of what might happen to the stock, we gave one über-bull's 2006 revenue estimate for Google a 20% haircut, trimmed his projected expenses by 5% (but no further, because bulls greatly underestimate Google's costs), deducted stock-based compensation and, generously, gave the company credit for the considerable interest income on its cash. The result: Earnings would be 30% lower than the bull's projection, at $6.28 a share. If the stock were to maintain its current multiple of 41 on those lowered earnings, it would be worth $257. It's more likely the multiple would shrink to as low as 30, in line with the slower growth. That would make the stock worth $188, versus its recent $360.
Perfect timing indeed. You think it is just a coincidence that they began the free period with this kind of sensational article? Google at $188?!?! The horror. The destruction! The carnage! Methinks that is as extreme as the folks who were cheering for $550 and above. But then again, what do I know? Hmmm.... It should be interesting to see whether traders try to do the traditional Barron's fade if the stock sells off more.
Yeah, I was wondering the same thing. They picked the perfect story to get people to rush to the site. As a wise man once said -- "there are no coincidences" :-)
An initial fade (rally) seems likely to me, if for no other reason than the stock is oversold. But you know me, I'll be looking for those bearish candlesticks to show up after the bounce.
Crammer has been hanging his hat on GOOG, what with all his huge disaster picks on Mad Money such as CD, SHLD, SWKS...for starters. If GOOG continues to drop over next few weeks and months, it may be the start of the end for his circus TV show.
Jeff Matthews also had an interesting take on Google this week:
http://jeffmatthewsisnotmakingthisup.blogspot.com/2006/02/google-thesis-schmesis.html
Hello Mike,
I have not spoke to you since August.
I am the guy from LaSalle Futures Group in the CBOT.
I don't look at many stocks as a rule but this article in Barrons on GOOG got me interested in
where the buyers and sellers are waiting to appear using supply and demand and the 4 stages of the market analysis like I use for my clients in the futures market.
I have a daily chart to share with the group using the 4 stages of the market and supply and demand as it applies to GOOG from today, 2-12-06.
It is a Tradestation chart on my computer, so I would need some kind of file sharing site to post it to in order to be able to post it like you post your charts to the blog.
Or, if you perfer I send the GOOG chart to you by email instead, email me at smisic@yahoo.com, and I will send it to you and you can post it.
Under normal circumstances, I would say that a downgrade in GOOG would be an opportunity to
pick up shares for a nice pop, but GOOG has entered a stage 4 decline according to my analysis. That means the sellers are in control.
So have the emini S & P's btw.
That is a double wammy for the high beta stocks.
Since GOOG is a stock that has a habit of gapping past areas of supply or willing sellers,
in the pre and post markets,
I would not want to buy puts on GOOG.
I would pick weaker stocks to short or buy puts on instead.
I am shorting the emini's on retraces to areas of fresh supply for my clients since 1293.00.
Hope you are well and your holidays were good,
Sincerely,
Steve Misic
LaSalle Futures Group
Chicago Board Of Trade
I will be looking for the bearish candlesticks too. There is only so much more cash out there to burn that can fade a story like this one. Will be interesting to see how things play out up to GOOG's next earnings report....THAT could be the biggest sideshow yet...
Mike,
Great stuff as always. If it's about hitting the fastball down the middle, then GOOG is a knuckler on the corner. Why swing at all?
To me the market looks just stuck in neutral, waiting for a catalyst in either direction. Will Iran be that catalyst?
I am finally making my way through the Barron's on-line edition. I think it is telling that right after the "Gurgle" article comes a letter from the editor called "Forget AOL, Try BOL." Hmmm....knock down two large internet players in a row while trying to promote the site. Another coincidence? ;) And just to build out the internet-related stories, there is an article lauding Earthlink (who has a partnership with Covad, remember them?!? The stock even trades again!), and an article talking about Vonage's struggles.
I find all this hullabaloo about some journalist’s opinion amusing. Analysis is full of ‘coulds’ and ‘shoulds’ and ‘ifs’ – in other words, it’s the usual guesswork. In November 2004, Barron’s admitted that valuing Google is a difficult business – using a host of common valuation methods (DCF, P/E, etc), they came up with nineteen different answers. As for the supposedly sinister insider selling – that was being referred to when Google stock was well shy of $200.
Not saying this in defence of Google – I would be looking to short any near term rally – my point is ‘Thank God for TA’. Anyone who buys or sells because of the opinion of some writer with a mediocre business degree (speaking generally here) is going to lose money.
Hey Mike,
Saw your interview with S&C Magazine today.
Congratulations are indeed in order.
They have a great magazine.
I sent you that GOOG chart, and I sent a copy to
our local stock talk radio show as well.
I got roasted about the GOOG support at 340 on "Stocks and Jocks" radio on Monday last week.
One of the guys on the show wanted to know if the GOOG support I saw at 340 was the bottom of my chart, lol. We are in the first area of supply now from that chart.
It may make GOOG go horizontal for awhile.
But GOOG could just gap past the 370 sellers up to the 400 sellers. I know if I was a 370 seller, I would be glad to take 400 instead.
I told you before you had something special here.
Now more people will get to see it for themselves.
I still send my futures traders here whenever they want to expand their horizons.
Later,
Steve Misic
LaSalle Futures Group
Chicago Board Of Trade