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Alphabet Inc. Message Board

  • investora2z investora2z Apr 27, 2013 11:40 PM Flag

    Time to tread carefully

    The results have done the stock good, and it is now moving towards the 50 DMA of $807. This level is likely to provide minor resistance. After that the obvious level will be the 52 week high which is likely to provide slightly stronger resistance. After that the territories are unchartered. A look at the valuations, on an absolute basis, it is trading at the 5 times its sales and 3.54 times its book value. The P/E (ttm) is 24 which is getting a little uncomfortable. All hopes are based on the ability of Google to bring out and succeed with newer and more innovative products. Hopes from Glass are already very high, and the self-driven cars etc. are also attracting interest. Then there is the Fiber. All these things put together ultimately seem to be factoring in a high probability of success of all Google ventures. There is not much competition in the search engine space, and the brand strength is amazing. Still the hopes and expectations are not always easy to meet. Latest case being Apple (AAPL) which did so well that it was punished when it slowed down. Anyway, for Google, there are other issues like unintended patent violations which can cost the company a lot of money. Recently, patent monetization has become big business and all are trying to enforce violations. MGT Capital Investments (MGT) recently filed a $4.5 billion dollar lawsuit against casino gaming companies. The Markman hearing is expected in second half of this year and MGT is already buzzing with activity. What is more important for Google is to clear the issues related to its privacy policy and allegations of “dominance”. With several lawsuits in EU, UK etc., a lot of PR work has to be done. All this put together, it seems that the immediate trigger, apart from result of the lawsuits, will be success (or failure) of Glass. One has to tread carefully and always remember that sentiments can change quickly.

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