Google and stock valuation

Google has always been a difficult case for financial analysts: an Internet company, which after 2001 has considered to be a risky class of stock, was able climb from an IPO of $80 to more than $400 in a little more than a year. While some have said that this is too much, others say that the price is still to low compared to the expected growth of the company.

The fact of the matter is that doing a financial analysis of Google is difficult, to say the least. Although the company is currently very profitable, its future is not easy to predict, since it depends on how the overall economy will adjust to the Google-based world that the company is trying to create.

In a sense, although the perspectives for Google are very bright, it is possible that in one year they have not close to the expected growth due to problems in the speed of change in the advertisement market. On the other hand, it is not at all impossible that growth increases at a much higher pace, if they are able to take the right moves.

To complicate matters most, Google is, with some good reasons, highly secretive about its next moves. During the last few months it has show a great appetite for mobile applications, but it has also created innovative services in the areas of multimedia. And lately, the Google-based payment system promises to take a good part of the pay-pal/eBay profits.

So, for anyone investing in Google the rewards may be huge, but there is also big possible downfall. Of course, this is not more than plain an simple investment risk: most financial investors are already familiar with this. It seems that the general public, and in particular technology-related journalists need to learn this small lesson.

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