Shares of Google (NASD: GOOG) are off over 3% pre-market on news that they plan to sell 14.2 million new shares in a secondary offering, worth around $4 Billion bucks at these market levels. A small gift to the shorts (after pummeling them for so long), the move is almost certainly wise.
At these levels for the stock, they'd be foolish not to use it to raise more money. Recall that after their sorta-botched IPO process they left several billion on the table, selling far fewer shares than they could have at a mere $85/share (after investment banks, and guys like Cramer bad-mouthed the whole process).
This news is more significant than the insider selling we talked about yesterday. For one, it's dilutive, to the tune of about 5%. And two, the insider sells which may have been planned long in advance by over-invested insiders wisely diversifying their personal portfolios don't say anything about sentiment at this price; whereas Google, the company's, sales strongly signal that their stock price is high, they know it, and they plan to profit from it.
The company says they plan to use the money for acquisitions, and other capital expenditures, which helps fuel a quietly growing story about the gobs of money that they're spending. Rumor is that they're hiring 10 employees per day, which in a year would almost double their employee count. They've been making several buyouts lately, making them look like the Cisco of old (NASD: CSCO)...ok, not that bad.
Now, in light of this news, enjoy watching Mad Money tonight when Cramer screams at you "I WANT YOU TO BUY GOOGLE AND MAKE SOME MAD MONEY!!!!" Google will be happy to sell you some.
The highlight of the show was of course Cramer's hyperbullish take on Google (GOOG), the stock no one seems to be able to get enough of.
Our guys have a table pounding BUY recommendation on the stock as well -- Google is cash rich, an earnings beast, and with the money they're going to raise with the secondary offering (announced Thursday morning), you can bet they'll be shopping during the Fall.
SG Cowen thinks Baidu.com is a likely acquisition target.
As many of you know, Catablast Media Group has a SELL recommendation on Baidu.
Carl Futia, Ph.D opines BIDU will hit $270 over the next 6-9 months.
So our team told him quite frankly that we don't give a rat's ass about an internet play spitting out less than $2 million in net income.
Get off the wagon while you can.
Back to Google: Cramer has the stock pegged at $350 and change based on a $7-10 EPS estimate for 2007 and a 35-50X PE.
That's looking way out, but we're going to go with him anyways.
Google had a blockbuster first year as a publicly traded company and the fireworks aren't going to halt anytime soon.
There's even talk that with GOOG's increasing float, the Internet search king will soon be joining the coveted S+P 500 list.
That means fund managers will be buying the stock and buying big (they have to).
Buy Google and treat yourself to an early Christmas.
Posted by: Catablast! Media Group | August 19, 2005 at 01:03 PM
From my experience the best investors are mature in their thinking and have realistic investment expecations. They measure their personal investment horizon in months and years - rather than weeks or days.
Posted by: Stock Investing Process | May 20, 2008 at 02:02 AM
As many of you know, Catablast Media Group has a SELL recommendation on Baidu.
Posted by: Edgar | February 24, 2011 at 09:33 PM
hahaha google it's amazing, I mean the offices in USA haha I want to work there, but that people it's to lazy.. and I can't work with lazy people...
Posted by: Dakuro | March 30, 2011 at 01:45 PM