Google stock finds new heights
SAN FRANCISCO — Google Inc.’s market value briefly surpassed $100 billion for the first time Friday, its stock scaling new heights after an earnings and revenue spike that astonished investors.
The online search leader’s shares traded as high as $346.43 on the Nasdaq Stock Market before backtracking as the day progressed. The shares gained $36.70, or 12.1 percent, to close at $339.90.
The slight retreat left Google’s market value $98 billion after just seven years in business. That was nearly $20 billion above the market value of Hewlett Packard Co. — a Silicon Valley pioneer founded 66 years ago.
Google’s shares have nearly quadrupled since their initial public offering at $85 just over 14 months ago — a stretch that has been marked by stunning financial growth and a steady stream of new products designed to lure even more traffic to a search engine that seems to spit out profits as efficiently as it does answers.
The innovation, combined with media consumption habits that are shifting more advertising to the Web, paid off in a big way during the third quarter.
Google’s profit, announced after the market closed Thursday, increased by more than sevenfold to $381.2 million. Excluding advertising commissions, revenue more than doubled to $1.05 billion.
After crunching the numbers, some of the most optimistic analysts became even more enthusiastic about Google’s prospects.
ThinkEquity Partners analyst John Tinker and Hoefer & Arnett analyst Martin Pyykkonen both raised their targets for Google shares to $425, up from $350, while Citigroup analyst Mark Mahaney predicted the shares would hit $430 within the next year.
“There is definitely a bit of a ‘wow factor’ here,” Pyykkonen said. “The (company’s) earnings are looking better than you could have imagined in your wildest dreams.”
Google probably will make even more money during the next two quarters, Mahaney said. That’s because advertisers typically spend more during the holidays and people usually are connected to the Internet more frequently during the dreariness of winter, creating more opportunities for them to visit Google and click on ads.
Mahaney and other analysts also expect Google’s stock to be added to the Standard & Poor’s 500, a move that would provide another lift to its stock as portfolios tied to that blue-chip index snap up more shares.
In another bullish sign, Google executives on Thursday said more Fortune 500 companies are lining up to join an online advertising network that so far has been dominated by mostly small and medium-sized businesses.
The company “appears to be tapping into new growth opportunities that may be just as significant as the ones that it already has tapped into,” Mahaney said.
Google is outperforming Yahoo Inc., the owner the Internet’s other major advertising network, largely because it has developed a formula to display ads more likely to intrigue its visitors.