
Google shares hit $1,000 after strong earnings - oulipian
http://www.bbc.co.uk/news/business-24585998
======
ChuckMcM
Google historically left a lot of money on the table (not using every spot on
the page for ads, giving away services with real value, etc.) They decided to
stop doing that when they decided they were a 'peer' of Apple's.

The shareholders love it because it means Google will finally be pulling in as
much cash as they 'can' vs as much as they needed. Users seem to be somewhat
divided on the issue.

Sophisticated users and people who are long time observers (like Danny
Sullivan) have noted that Google is squeezing the value proposition at the
expense of people who can ill afford it. ('Ranking' on Google is very much a
pay to play kind of thing these days with their page layout). As others have
mentioned they have gone all in as an exploiter of their demographic data. And
"thinking big" as Larry would always exhort people to do, includes thinking
about how much money you could get for the sorts of things that only someone
who has Google's knowledge of the activity stream can get.

Now historically this has often been associated with fading influence and
success (the old 'killing the goose that lays the egg' kind of thing). It will
be interesting to see if Google is an example of this or they manage to grow
into actually being a peer of Apple.

~~~
md224
> 'Ranking' on Google is very much a pay to play kind of thing these days with
> their page layout

Could you expand on this? Are you referring to how AdWords content is visually
privileged over organic search results?

~~~
ChuckMcM
I think Danny Sullivan over at Searchengineland has done a better job of
chronicling the changes but to give you a flavor, the size of the ad space
before the first organic has grown tremendously, the injection of Google
properties (G+, Youtube, etc) has further pushed on search results. When a
buying intent is detected the 'shopping' bar activates which only shows
shopping results from people who advertise on Google, etc.

An interesting experiment is to look at every link on the search results page
and try to figure out how many _don 't_ generate cash for Google, its getting
harder to find more than one, yet when Google was started it only profited
from the ad-links.

As others have mentioned search has changed. There is no longer a big push for
'finding things on the web' which was the appeal of early search engines, now
the bulk of the web use search as their portal to a giant reference library
and product catalog. One of the things Google tried to monetize and failed was
reference information (Knol) so now more and more they just show you the fact
you were looking for, scraped from some web page, right on their page, no need
to click away.

I think it was a smart move on their part from the shareholder perspective
(disclosure I sold all my Google stock at $650 :-(). The second order effects
though will be interesting. You see if Google becomes just a catalog, sort of
like SkyMall "Magazine" in airplane seats, then it risks losing all of its
unique utility. I'm certain that Microsoft can construct an equally compelling
catalog as can Yahoo. This will shape the future for them.

~~~
rprospero
I performed your experiment and it didn't seem to match your conclusions.

My search was: jwt web toolkit

The search page itself had no Google ads on it.

The top link was the homepage for the toolkit project. There were no ad links
on the page.

The second and third links were for wikipedia, which contained no Google ads.

The fourth link did have Google ads on it. The fifth and sixth lengths did
not. The seventh link did.

I tried again with a different set of search terms: neutron spin echo

The top of the page did contain a link to Google Scholar, followed by three
links to pay walled articles. I am not aware of any profit agreement between
Google and the publishers, but it wouldn't surprise me to learn that it's
there.

The remaining links were either to pages containing no advertising (Google or
otherwise) or to more pay walled articles. Short of Google have a relationship
with the publishers, Google again made no money on this search.

For the record, I don't have an ad-blocker turned on, so I would see ads if
they were there.

~~~
thetrb
"jwt web toolkit" and "neutron spin echo" are your best examples of results
that might contain ads?

How about "playstation 4" for example?

~~~
plywoodtrees
I get one ad there. The first organic result is the Sony homepage. The second
is the wikipedia page.

Seems pretty reasonable.

------
JonSkeptic
I think this is interesting because it matches my user experience with Google
products in a very inverted way. Google search has gotten worse and worse
lately, forcing me on to other search engines with worse UIs just so that I
can get useful results. Youtube UI gets worse every time they update it. They
cancelled the RSS reader. The email UI keeps getting worse and featuring more
ads.

But the stock value hit $1000. I guess they're doing something right, it's
just not something that affects me in any positive way.

[EDIT]:'affects', not 'effects'

~~~
lawdawg
This is because Google has started optimizing for the 99% use case, which most
HN'ers usually don't fall under. They originally optimized for what most
Googlers like (who are generally the 1%) and have since learned that you can't
run a business just pleasing the elite and whiny ones.

~~~
golergka
I'm a bit confused about that. Doesn't their algorithm take the user's profile
into account?

~~~
nonchalance
>Youtube UI gets worse every time they update it. They cancelled the RSS
reader. The email UI keeps getting worse and featuring more ads.

Those concerns are completely unrelated to their algorithm. I doubt they want
to maintain many Youtube UIs.

------
fersho311
Fun fact: If you had bought a call yesterday for $300, it would now be worth
$3100. 1000% return on investment.

Yesterday I bought a chipotle call (because of earnings release) for $600 and
now its worth $3600

Now that the political budget debate is over, I think we will see a
spectacularly volatile movement upwards and strong earnings will push stocks
to absurd prices way over any reason. The best thing to do is to ride the wave
and make some extra cash. It doesn't make any sense (price vs earnings), but
as long I'm making money thats okay.

Do keep in mind that Google did not jump $130/share because its earnings was
spectacularly better than ever. It made this huge jump because the market is
headed for another bullish run and the market is crazy.

I trade stocks on the side for fun, and I blog about my trades here:
[http://songzmoney.quora.com/](http://songzmoney.quora.com/)

~~~
MarkMc
Let's say you play blackjack and are dealt a 20. If you then hit and get an
Ace, does that mean it was the right decision?

~~~
neuralk
The "right" decision depends on more information. For example, hitting on 20
is the right decision if you are betting no money or money that isn't your
own.

------
dragontamer
The value of a company is not measured in its individual stock price, but
instead measured in its market cap.

The real headline should be: Google hits $330 Billion market cap, making it
the 3rd most valuable company in the world.

~~~
nonchalance
$1000/sh seems like a more momentous headline than $330B market cap.

On the other hand, It's more likely that we see the headline "$1T company"
than "$3030.30/sh"

~~~
astrodust
They could've hit this years ago by doing a 10:1 stock consolidation.
Fetishizing over share prices is meaningless. What if they had only six
shares?

Market cap is what matters.

~~~
nonchalance
Berkshire Hathaway class A is current 175821/sh :) extreme example.

But my point was that, while market cap is all that matters, people still
fixate on round numbers

~~~
astrodust
That's one way to exclude peasants from investing in your company.

~~~
tedunangst
BRKB is only $117 though.

------
fersho311
Chipotle hit $500 for the first time ever:
[https://www.google.com/finance?q=NYSE%3ACMG&ei=R15hUrCcG6i2i...](https://www.google.com/finance?q=NYSE%3ACMG&ei=R15hUrCcG6i2iAL_jgE)

As we head towards a strong earnings season, I feel that we might see many
companies hitting their highest ever stock price, especially now that the
government shutdown has been resolved (sort of)

~~~
adventured
54 PE ratio, growing at 6%. Welcome to another extreme Fed bubble, round
three. A round of POMO shots on the house!

What happens to stocks with 60 and 80 pe ratios, growing at 6% to 12% when the
music stops? Same thing that always happens.

Need a Dr. Koop example? How about RetailMeNot (SALE). By the time this bubble
is done, they'll probably have a $2.5 to $3 billion market cap, with not even
the slightest of fundamentals to support that.

Yellen's dove policy will see this stock market pushed to the limits, and then
see it crash spectacularly, again. Repeating asset bubbles is the only trick
they know.

~~~
fersho311
Good point. But till the crash, lets ride the wave and make some money.

~~~
grey-area
But how do you know when to get out?

~~~
sgustard
Just before everyone else does.

------
fear91
I guess the June search-algorithm updates really worked. (Kicking out everyone
that earns without giving Google it's piece of the pie).

Google keeps removing small business websites from its results, forcing them
to use Ad-Words. This strategy cannot be sustained unless they want 100%
commercial / 100% junk results. I wonder what will they do in the future.

~~~
NathanKP
I'm no Google fanboy but what you are saying is a pretty strong accusation.
Where is the data to back what you are claiming Google is doing?

~~~
anon1385
[http://i.imgur.com/eBtzYic.png](http://i.imgur.com/eBtzYic.png) see any
organic search results there?

~~~
sharkweek
Yes --

[http://i.imgur.com/vFwD9xr.png](http://i.imgur.com/vFwD9xr.png)

~~~
anon1385
Ads depend on your location etc. We have had a discussion about this same
example before and plenty of people got similar results:
[https://news.ycombinator.com/item?id=6533287](https://news.ycombinator.com/item?id=6533287)
e.g. [http://i.imgur.com/mhJhc5W.png](http://i.imgur.com/mhJhc5W.png) and
[http://i.imgur.com/2iFv7Yf.png](http://i.imgur.com/2iFv7Yf.png)

And for what it's worth, this is the result I got just now in the UK:
[http://i.imgur.com/YHXngwR.png](http://i.imgur.com/YHXngwR.png)

~~~
nonchalance
It could be because the plus500.co.uk is manifestly UK (and people saying
otherwise are probably based in the US).

~~~
anon1385
Yes, it's just an example. I'm sure there are other terms that get more ads in
the US than the UK. The point isn't this exact search term, it's that there
are combinations of searches+locations that return pages where the entire of
the visible page is filled with ads or google content and you have to scroll
to see any real results at all.

------
trevmckendrick
Share price is relatively meaningless. It needs to be paired to total shares
outstanding.

It's arbitrary by itself because it's a function of shares outstanding and
total market value, one of which the company can (relatively easily) control
via stock splits.

~~~
smoorman1024
Well GOOG added $36 billion dollars of market cap overnight. To put that into
perspective that is 9 BBRYs (RIMM), 1.5 TSLA's, 1.5 LNKD's, or 0.5 UNP's
(Union Pacific).

~~~
xentronium
How come LNKD is so expensive?

~~~
tanzam75
LNKD is expensive because it participates in the social-networking stock
bubble.

------
debt
It seems Google has entered a stage where the data is starting to really pay
off. They seem to be using it not only to help consumers but also tweak their
own business decisions. That's some powerful stuff.

~~~
brymaster
No, Google is merely squeezing organic results off their SERPs and replacing
them with ads. That's not helping consumers as they prefer organic results.
They have to continuously stuff more ads into the model to keep the growth
machine running, making tweaks here and there. Google is probably only a few
years away from adding "paid inclusion" into the results like Yahoo used to
have, where you could literally pay to have your result listed at the top of
the page where it wouldn't look like an advertisement.

"Google said that paid-for clicks increased by a quarter during the July-to-
September period, from a year earlier, the highest rate of growth in the past
year."

How Google is Killing Organic Search

[https://news.ycombinator.com/item?id=5971560](https://news.ycombinator.com/item?id=5971560)

Forrester: Consumers Prefer Organic Search, Not Search Ads, For Discovery

[http://searchengineland.com/forrester-consumers-prefer-
organ...](http://searchengineland.com/forrester-consumers-prefer-organic-
search-not-search-ads-for-discovery-164112)

------
jluxenberg
P/E remains pretty stable at 30-ish

[http://www.wolframalpha.com/input/?i=plot+p%2Fe+and+price+NA...](http://www.wolframalpha.com/input/?i=plot+p%2Fe+and+price+NASDAQ%3AGOOG+between+01%2F01%2F2008+and+10%2F19%2F2013)

------
ChikkaChiChi
This anecdotally proves that focusing in on your core business can result in
stronger earning potential. It's not a new concept, but it is somewhat easier
to explain to my boss (who needs to learn focus).

------
ashray5
Its interesting how $1000 is a psychological number for a lot of people, $1000
number makes the Google stock join some "prestigious" $1000 club according to
CNBC. Some people now think its too expensive because of its $1000 and
Facebook is in $50s.

If Google decided to split the stock early on, it wouldn't have seen this day,
and all the news that comes with crossing the $1000 mark.

So much for all the financial models that assume investors are rational.

------
TomGullen
A nice 10 ball if you got in on their IPO.

~~~
pyrrhotech
or the 900 calls last night

~~~
AtTheLast
I wish I would have bought some calls. Google always seems to smash earnings
and jump up a nice percentage.

~~~
nostrademons
...except for the last two quarters, where it missed earnings and the stock
took a huge tumble after they came out. GOOG tumbled from $813 -> $774 in
April when earnings came out, and from $923 -> $882 in July. That's probably
why calls were affordable this earnings season; after the last couple
quarters, the street didn't expect Google to blow out earnings.

------
qdog
Google doesn't pay dividends or give public shares voting rights, while I get
it that people believe the intrinsic value will appear at some point, this is
not how I would like to invest money in a company, regardless of what price
the stock hits.

~~~
vpeters25
I think the same and wonder why aren't shareholders pressuring Google to start
paying dividends.

~~~
qdog
Shareholders don't have voting rights, how can they pressure Google to do
anything? I don't know if they should be paying a dividend at the moment, but
their stock conveys no power to the stockholder. It's like paying taxes
without getting to vote.

Their stock price might go up for the next decade for all I know, and it's not
like they don't make money or something. I just don't want to invest my money
without getting something in return other than the ability to convey my
investment to someone else.

~~~
tanzam75
> _Shareholders don 't have voting rights, how can they pressure Google to do
> anything?_

Shareholders do have voting rights at present. The problem is that Google
Class B shares carry 10x the voting rights of Class A shares. Thus, even an
overwhelming majority of market cap would still be unable to outvote the
insiders.

Google is in the process of introducing a nonvoting C share class. This
innovation was passed despite a mere 12% support among Google's Class A
shares, because the insiders voted all of their Class B shares in favor. From
now on, new shares created through stock options will no longer dilute insider
control of the company.

~~~
qdog
Right, my mistake. Not sure why I was thinking they didn't get to vote at all
right now, but still, yes owning a share of Class A doesn't entitle you to
very much right now.

------
atlanticus
So I guess the Snowden leaks collapsing US internet dominance didn't
materialize.

~~~
jamesaguilar
Well, two issues. First, there hasn't really been much time for viable
replacements to be constructed, so who knows? Second, people who thought that
was a likelihood as opposed to a faint possibility were deluding themselves.

------
yeukhon
I am always surprised at how much Google can make. I always see ads but I
barely ever clicked on ads. I might click on one or two ocassionally. I might
click on a few ads before Youtube content is loaded for me. But that's it. I
can understand a few clicks * two billion users is a lot of clicks.

Remember those days when adsense was crazy on everyone's page. Somehow,
Google's ad marketing works so well (and probably pretty expensive by now)
that it just works. Plus, since everyone is moving to the Internet, ads are
just a norm to do for businesses.

------
robryan
I think this is on the back of product listing ads which are now aggressively
pushed, these combined with regular ads crowd out the organic results on
ecommerce bases searches.

Unlike text based ads which require significant time/ tech investment to
create a campaign across a large number of products, product listing ads just
require a merchant to upload a feed.

------
wehadfun
I found an article from 2007 that predicted this. May be some even earlier.

[http://www.bloggingstocks.com/2007/06/06/google-hits-all-
tim...](http://www.bloggingstocks.com/2007/06/06/google-hits-all-time-high-
but-it-could-hit-1-000/)

~~~
hdevalence
Such predictions are only relevant if we _also_ see all of their other past
predictions, of course.

------
znowi
And no privacy issues, NSA revelations, services shutdown, Google+ coercion,
and further exploitation of users have any effect on the bottom line. You can
get away with anything when you're big and important.

------
blisterpeanuts
Sure wish I'd bought some when it first came out at $180.

~~~
blisterpeanuts
$85, actually!

------
alraiah
I have a site ÇÔćÝ results always late Exclusive Articles my site :
[http://pagearabia.co/](http://pagearabia.co/) ?!!!

------
keepkalm
Wonder if people actually went out and spent on AdWords when the organic
keyword data went to 100% not provided. Has to account for at least some of
it.

~~~
tonfa
Why would they? Using adwords doesn't give you the data that used to be
provided. The search query report does the same kind of aggregation as
webmaster tools.

------
elwell
wow, they went up over $100 today.
[https://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&...](https://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=Linear&chdeh=0&chfdeh=0&chdet=1382126400000&chddm=1955&chls=IntervalBasedLine&q=NASDAQ:GOOG&ntsp=0&ei=doxhUgGL69EB6XM)

------
Theodores
Advertising sales is a good indicator as to how well the economy is doing - if
times are good then people advertise, if everyone is screaming recession then
there is not so much money around to advertise.

Hence, if Google does well does that mean the economy as a whole is doing
well? Is the Google share price a good indicator, perhaps a better indicator
than conventional metrics such as employment level or the FTSE?

~~~
yetanotherphd
No, GDP growth and unemployment are better measures.

~~~
nostrademons
Grandparent poster is looking for leading indicators, since that's where you
make your money. GDP growth, by definition, tracks how the economy is doing
_today_. Unemployment is a lagging indicator, tracking how the economy did a
few months ago, because it takes businesses time to hire. Bond yields and
stock market prices are considered leading indicators, because traders try to
anticipate how the economy will do in the future.

To beat the market you need reliable indicators that are _more_ leading than
the stock market. Some of the ones people look at are advertising spending
(companies only advertise when they expect consumers will have money to spend
in the near future), capital investment (companies invest in new productive
capacity when they expect demand will be higher in the future), and R&D
spending (companies can only afford to spend on speculative goals when they
have cash burning a hole in their bottom line).

------
dm2
Would a reverse stock split or stock merge encourage more people to buy the
stock or less, or no effect?

~~~
thrownaway2424
More people would buy it, because small portfolios would be able to afford a
share without ridiculous risk imbalances.

