Google Tops $500: Looking Back to the GOOG IPO

A newsflash: Google stock topped $500 for the first time this morning. While it’s just a number, it is a reminder that Google has been on a rocket ride since its August lows: The company’s stock has soared from $370 to $500 in the period.

Precisely two years earlier, in August of 2004, there was similar misplaced skepticism about Google’s prospects. Recall, at the time there was much weeping and gnashing of teeth about Google’s imminent IPO. The company’s founders had given an interview to Playboy magazine, violating the pre-IPO quiet period; many people thought the Dutch auction format would hold back the price, to the point that it would likely fall on the offering; it was a late-summer offering; and the likely price was even revised downward, with it falling from $120-ish to $75 or so.

Here is some sample reading:

What is interesting to me isn’t merely beating up on journalists for writing what they were hearing. What is interesting is how many supposedly savvy market participants fed such wrongheaded analysis to said journalists.

Okay, you can argue that some were trying to keep the price down so they could play the pop, but that is giving too many people too much credit. More likely, to my way of thinking, is that most of these people genuinely believed what they were saying, but didn’t take into account that old market saw: If everyone believes something is going to happen in the market, it has almost certainly already been discounted into the price/expectations. Google was a lovely case in point, as I pointed out in a column before the offering.

Related posts:

  1. Sequoia’s Google Gains
  2. Contrarianism on the Google IPO
  3. NatPost Column: Google’s One-Month Anniversary
  4. GOOG Beats Bears and Bulls
  5. Meta-IPO Journalism

Comments

  1. Ah yes, Paul — but you also said it wasn’t your “long-term cup of tea.” Sounds a lot like an “underweight” rating to me :-)
    For what it’s worth, I was one of the chumps who wrote about Google being overvalued at $70 a share. What a moron.

  2. True enough, but I’ll take any time being right in the short term on a Google versus being (temporarily) wrong about the long run. There has been lots of profitable time since to adjust my long-run view … :-)

  3. Andi says:

    If you’ve never bought a stock at its top or sold one at its bottom you’ve not traded very much…

  4. Count me in as someone who totally missed Google. I saw them as a one-trick pony that could never compete with Yahoo.
    Swiiiiing and a miss!
    GT