By Mike Caggeso
Staff Writer
Shares of search-engine Google Inc. (GOOG) leaped over the $600 mark for the first time Monday, peaking at $623 yesterday (Tuesday), before closing at $615.
Google hit this new high-water mark less than three weeks after Money Morning featured a story about analyst and media writer Paul R. La Monica, who predicted Google shares would hit $600 per share. At the time, Google shares were trading at about $560 a share.
And with Google coming out with a phone that will rival Apple’s much-heralded and much-hyped iPhone, Lehman Brothers Holdings Inc. (LEH), said Google’s share price might climb as high as $714.
Some analysts argue that, with an Internet stock in a bull market, setting a price target is a lot like creating a self-fulfilling prophecy: The mere act of setting a target may cause the stock price to rise and hit that objective.
But the bottom line is that Google not only has a good product, it is always upgrading its offerings to keep space between it and its trailing rivals.
Media writers hail Google leapfrogging the $600 level, but are missing the reason why Google may also soon eclipse the $700 level, analysts say. While Google’s empire is constantly growing through its new products and acquisitions, it makes sure to thread those new pieces through its core product — targeted search technology. Essentially, Google’s growth strengthens its base while other expanding companies end up chasing after its new offerings.
Take for example, Google’s acquisition of Jaiku — an important deal that didn’t garner half the headlines that the $600 stock price has corralled, by the way. Jaiku is a company that produces social network “activity software” for computers and cell phones. With it, not only will Google reach bigger audiences, the company will also be able to target them individually. And that’s the basic and key reason why advertisers have no problem paying Google’s marked-up rates.
Also in Google’s game plan is to show advertisement-laden YouTube videos on thousands of Web sites, hoping to generate revenue from them. This time, instead of competing with other search engines or software companies, Google is going after traditional media — primarily newspapers and television. Again, better targeting is what advertisers want, regardless of the medium.
News and Related Story Links:
- Money Morning Investment Research:
Google to Hit $600 a share? Looks That Way, Media Writer Says. - CNN Money:
Lehman Raises Google Target. - CNN Money:
Google to let ad partners show YouTube videos.