If you bought Google shares during their IPO at $85, you made 5 times your money in about a year. Can you do that by buying Google stock today? No.
Google shares are currently around $500. Could they go to $2500 within 5 years? I’m thinking yes.
I just pulled that number out of the air to make it 5 times the amount of the current share value. It’s not based on any fancy metrics. It’s just a prediction based on what Google is doing as a company these days and the market potential of some of those things.
The Google Growth Spurt
Google’s first big secret has always been to make things simple. Their search page is simple and uncluttered and AdSense is very easy to use. Their second big secret has been to build great applications that people can use for free. Gmail, Blogger, Google Maps, Google Earth, and Docs & Spreadsheets are a few of the flagships.
They have a lot of things in development right now. Because they keep things simple, development moves forward easily for them. Because all this stuff is free, even when they do have bugs and problems to sort out, people are generally pretty tolerant.
Here are some of the key things they’re doing right now:
- Integrating Docs and Spreadsheets with Gmail. They’re steadily creating a complete package to compete directly against MS Office.
- Building massive new data centers in Oregon and North Carolina. Video anyone?
- Changing their Adsense TOS to softly hit major competitors. The new rules are good for many of Googles smaller competitors. They’re not so good for the larger ones like Yahoo. The rules will hurt Yahoo and MSN AdCenter as many publishers choose AdSense to wear the best color scheme. And then the rules will hurt them further as publishers are more open to try out other, smaller ad networks.
- Lastly, one word; YouTube. Two more words; Bill Gates. And three very important words; User profit sharing. Since Google purchased YouTube the idea of melding the internet and tv is becoming more and more possible. Bill Gates thinks so too. The announcement of a profit sharing plan for YouTube users coupled with the fact that CBS and NBC are top 5 most viewed YouTube Directors pretty much ices the cake.
The Caveat And The Conclusion
Google overwhelmingly depends on advertising revenue for their growth and survival. If the bottom completely dropped out of the advertising market, they would be in big trouble. This is very highly unlikely, but never impossible.