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Wednesday, October 03, 2007

GOOG $2000 Target by Henry Blodget

I don't think Henry Blodget's $2000 price target for Google stock (GOOG) is all that crazy. First off, it's not really a price target. Henry Blodget has been banned from the stock market industry, anyway. Let's put this in context. Because GOOG hasn't split, the per share price seems high, but that's irrelevant. This high share price might actually reduce volatility because individual investors will avoid purchasing the stock, thinking the valuation is high. Looking at ratios like P/E and P/CF and estimating growth rates, the stock is arguably cheaper than many of its rivals. GOOG's not even a ten bagger, yet. The GOOG IPO price was $85, so $850 would make it a ten bagger. A GOOG price of $2000 would be a 24 bagger. Is that so unreasonable? Of course, this depends on the timeframe. AOL (now TWX) was close to a 100 bagger from 1995-2000:

aol twx stock chart

Granted, that was during a period of irrational exuberance. Still, if AOL could post close to a 100 bagger, is it that unreasonable to think that GOOG could become a 24 bagger? What other stock has the kind of growth potential of Google?

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