My Google past, present and future
Don’t forget this week’s Live Q&A Chat at 2pm EST at http://twc.scutify.com/members. Here’s today’s report.
Though Google’s been in a bit of a funk for the last year, and it’s one of the few mega-cap tech stocks that isn’t near its all-time highs right now, I still plan to own it for a very long time. But the near-term Google stock funk continues, as , I’d outlined a few weeks ago:
“Remember when the markets were at all-time highs like every day in 2013 while Apple’s stock muddled along at the bottom and was making what seemed like endless new 52-week lows? I think Google’s stock in 2015 might be similarly short-term depressed like Apple was in 2013, but that at some point it’ll make new all-time highs and head onto $1,000/share by 2020 as I’ve long predicted.”
And Google’s 2015 has been less than stellar so far, up 3% vs Apple’s up 18% year-to-date move.
I’ve been a long-time shareholder and vocal bull on Google. Indeed, I scaled into a little bit more Google GOOG stock when it dropped below $500 a share a few weeks ago and it’s one of my largest positions as it has been since the day it came public. Here’s a quote from yours truly from back in 2006 debating Google’s stock with Henry Blodget and others as I explain why I planned to own GOOG stock for a very long time:
“I’ve no idea if Google bottomed last week or not. I’ve owned Google forever, and while I do trade around a core position, I really plan to own Google for a several years yet. I’ll certainly strive to be flexible and if/when the fundamental story shifts, changes or otherwise falls apart, I’ll then look to sell. Whether Google falls below $338 in the near term or not, doesn’t factor into my analysis.”
Split-adjusted since Google split into two stocks, that $338 price I’m talking about back in 2006 is equivalent to $169 per share vs the current quote for the GOOG and GOOGL shares in the $530s. So the stock is up 300% plus in the last nine years since that debate.
Fast-forward to 2010, and I wrote a widely-panned article called “Deal with it: Google’s going to $2000.” Again, accounting for 2013’s stock split, which gave Google shareholders one share of Class A and Class C shares each, my $2000 price target for Google shares is now $1000. And while I put a 2015 timeline on the $1000 per share price target for Apple that I updated in an article yesterday, I put a 2020 on my price target for Google in that Deal with it: Google’s going to $2000 published in 2010.
The upshot of all that is that Google needs to rally 80% more from its current levels here in 2015 by 2020 to get to my price target. I think the $2000 by 2020 prediction, while outrageous at the time, is now probably conservative. As Android becomes an ever bigger force in wearables, car dashboards, smartwatches, and other still-unthought-of form factors, Google’s likely to see some high margin benefits from being the gatekeeper of much of the world’s digital lives. As I’d explained it would be back in that 2006 debate for the FT:
“The internet is driving us towards a golden age of content consumerism, in which we have access to any and all content, from the written word of Hugo to the recorded song of McCartney to the silent film of Chaplin and from all kinds of devices, from TV to projector to iPod to computer screen. And Google’s plan is to be the de facto gatekeeper.”
So, what am I doing with my Google stock right now and into the future? I scaled into a little bit more of the GOOG version, Class C, stock when it dropped below $500 a share a few weeks ago and it’s one of my largest positions as it has been since the day it came public. I plan to own Google for at least another five to ten years, and as long as they continue to execute, grow and Revolutionize the world, I consider them a Revolution Investment as I have since the day they came public and I bought the stock the first time.
