I know Google's search engine is probably the best on the web. They have a popular e-mail service. They also offer Google Docs, Google Talk, and Google News among many, many other services. Google makes their money from advertising revenue, but why is their stock worth $500? Am I missing something here and this is stock is valued completely on hype? Where does Google create such value when they sell absolutely nothing besides advertisements?
2007-01-12 12:45:17 · 3 answers · asked by tau.reanb 2 in Business & Finance ➔ Corporations
It is because of what they call eyeballs. More people use it or look at it than any other site. Just like your television it used to be ABC, CBS, NBC and it is all about ratings or eyeballs.
2007-01-12 12:49:58 · answer #1 · answered by Anonymous · 0⤊ 1⤋
Take a look at Google's income statement where it says "revenues". The revenues are Google's ad sales:
http://finance.yahoo.com/q/is?s=GOOG&annual
A couple years ago Google made 1.5 billion in ad sales. Now they make almost 10 billion in ad sales. The entire company (buying all shares @ $500) would cost cost 190 billion. A lot of stock experts seem to think that is a good deal. Again, 190 billion is how much it would cost to buy all of Google for yourself at about a $500 share price.
Of course a company stock such as Google is nothing more than the money you can get out of it. People figure Google will generate more than 190 billion worth of money over the next couple decades, so they pay that much for the stock.
2007-01-12 21:25:21 · answer #2 · answered by Citizen80285bnz 2 · 0⤊ 0⤋
Because the market believes their future earnings potential will provide for a good return on investment at the current share price.
2007-01-12 12:57:28 · answer #3 · answered by monkey 5 · 0⤊ 0⤋