Overvaluing Google


The Motley Fool has a good article about why Google isn't worth as much as people think.

Today, Wall Street's expectations for Google are sky-high. Even a small misstep has the potential to cause current stockholders considerable pain. Analysts currently estimate 30.5% annual revenue growth for the next five years, placing 2011 revenues at about $24.4 billion. That's larger than WPP Group, and Omnicom, two of the largest advertising agencies in the world today, combined. It's a precarious perch for a company facing a number of serious challenges.

Personally, I find myself using Google less and less as time goes by. Search is a sexy business that the top tech companies all want to own. That kind of competition can be bad news for profits.

  • Thanks for that. I didn’t see a source but the stat about how many media customers defect (30% change media each year) but that number should stop the blue sky projections.

    You have to look at advertising (in the 21 century) like any other product or service. People buy it with expectations. If they are disappointed they don’t continue to buy. Media has refused see that for decades because there were always enough new clients to provide increases. But as the well is running dry they need to face facts.