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Started By
Message
$GOOGL was $75 before Covid - $161B revenues, $34B net income, 13.97B shares
Posted on 11/4/22 at 12:38 am
Posted on 11/4/22 at 12:38 am
quote:
Now GOOGL is $85 - $285B Revenues, $66B net income, 13.0B shares.
Same enterprise value in both cases, but 77% higher revs, 94% higher net income.
14.7x EV/E.
Pre Covid the 10 year treasury was ~1.9%. Now the 10 year is ~4.1%. For simplicity, if you calculate net present value (NPV) using Discount Cash Flows (DCF), a 2.2% rise should only result in a NPV of ~20-25% lower. But $GOOGL is at ~50% lower multiple.
LINK
So, should we be listening to this Mike guy and going long Google?
ETA: Fixed link.
This post was edited on 11/4/22 at 9:51 am
8
Posted on 11/4/22 at 3:19 am to Street Hawk
?
Posted on 11/4/22 at 6:03 am to ynlvr
(no message)
This post was edited on 11/4/22 at 6:04 am
Posted on 11/4/22 at 6:04 am to Street Hawk
Check your link
Posted on 11/4/22 at 7:41 am to castorinho
quote:
Check your link
This looks like the tweet he was trying to link
Twitter Google valuation
I've been pretty curious about several of these good tech companies returning to pre-covid share prices while their rev's etc have increased. I guess the question, besides the effect of the overall economy/market, is can these companies maintain and grow these numbers or was it all just a blip due to the strange circumstances that COVID created?
Posted on 11/4/22 at 7:59 am to Street Hawk
Is the price wrong or are the assumptions about earnings and revenue wrong?
Posted on 11/4/22 at 8:24 am to Street Hawk
Much higher discount rate due to interest rates. Not saying it isn't undervalued but it matters what the market was using to discount it.
Next it matters what the market thinks it will grow at. Do the next few years seem like boom years?
Next it matters what the market thinks it will grow at. Do the next few years seem like boom years?
This post was edited on 11/4/22 at 8:26 am
Posted on 11/4/22 at 8:57 am to lsu13lsu
quote:
. Do the next few years seem like boom years?
No. I think the worst is yet to come. I think we hit bottom sometime next year. I don't think you lose at these levels, but I wouldn't be shocked if we can get bigger discounts on some of these titans. Plus, I think a lot of money will start pouring into energy as oil prices go back over $100 and higher.
Posted on 11/4/22 at 9:06 am to Street Hawk
Growth has slowed, so thus it losses it's premium valuation. Stock sold off since last quarter only 6% YoY growth.
I don't think you value GOOGL the same as pre-covid.
I don't think you value GOOGL the same as pre-covid.
Posted on 11/4/22 at 9:50 am to lsu13lsu
quote:
Much higher discount rate due to interest rates.
Math related to the higher discount rate and NPV of future earnings is in the 3rd bullet point of my OP.
Posted on 11/4/22 at 10:05 am to Street Hawk
quote:
Math related to the higher discount rate and NPV of future earnings is in the 3rd bullet point of my OP.
That only addresses interest rates. There are other pieces to the discount rate. Risk Premiums, etc.
But the discount rate is only one piece of the NPV. You have to also consider the growth rate.
Posted on 11/4/22 at 10:23 am to Street Hawk
I'm still bearish on the market and trying to not stock pick (DCAing VTI) but GOOGL was too tempting yesterday afternoon. I started a small position and will only add if it drops further, say to $75. I'll go to 100 shares if it drops lower than that.
Advertising is a huge business and they have a large moat. I've quit using many of their services but still a big YouTube fan.
Advertising is a huge business and they have a large moat. I've quit using many of their services but still a big YouTube fan.
Posted on 11/4/22 at 10:45 am to wheelr
All In guys have a pretty interesting stance on GOOG and Meta.
Said they will both get their spending under control and follow the Apple model which should help overall performance from where its at.
Will it have meteoric potential anymore? No, but it should be a very solid to hold over the next 5-10 years.
Said they will both get their spending under control and follow the Apple model which should help overall performance from where its at.
Will it have meteoric potential anymore? No, but it should be a very solid to hold over the next 5-10 years.
Posted on 11/4/22 at 10:56 am to STLhog
quote:
Will it have meteoric potential anymore? No, but it should be a very solid to hold over the next 5-10 years.
They sell ads
Posted on 11/4/22 at 12:42 pm to Street Hawk
Are you saying there is irrationality in Google's price; humans (stock investors) as irrational creatures? Not news.
Perhaps this is Google packaged in so many index funds whose growth is creating "irrational" (at least vs NPV/DCF frame of thought) value?
Tell us more.
Perhaps this is Google packaged in so many index funds whose growth is creating "irrational" (at least vs NPV/DCF frame of thought) value?
Tell us more.
Posted on 11/4/22 at 12:57 pm to wutangfinancial
quote:
They sell ads
Which is incredibly profitable.
At the core, is it any different than what Apple now does?
They haven't developed a legit, differentiated new product in over a decade.
Posted on 11/4/22 at 2:13 pm to STLhog
quote:
quote:
They sell ads
Which is incredibly profitable.
At the core, is it any different than what Apple now does?
They haven't developed a legit, differentiated new product in over a decade.
And ad spending has dropped significantly on other platforms (Facebook, Roku, Twitter, etc.) in the last few months. I see Google falling a little more before it bottoms out.
Posted on 11/4/22 at 5:19 pm to Street Hawk
quote:
So, should we be listening to this Mike guy and going long Google?
As a longer term investment or a trade?
Posted on 11/5/22 at 12:45 pm to Jag_Warrior
I think tech likely goes lower over the next year and GOOG won't be immune. But as a long-term investment (3+ years) I think it will be fine. It's trading at roughly a 15 forward PE now.
I started a small position recently. I'll average down as it declines.
I started a small position recently. I'll average down as it declines.
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