When Google went public in August 2004, many were impressed that the stock opened at a premium to the price paid in what was then (and in some respects still is) the unheard of direct auction IPO. Some may have dreamed of greatness for Google stock, but if you’d suggested then that Google would pass through $700 a share (it closed at $108.31 on its first day) you would have been derided as a lunatic. On October 31, Google stock passed through $700 a share, becoming the 5th largest listed company in the United States.
A search engine that started under the name of “BackRub” by two Stanford students in 1996 is now on paper worth more than corporate giants including the global banking conglomerate the Citi Group, Proctor and Gamble and Walmart. Google is worth more than the big three US car makers put together, and then some. We may obsess at times over Google, and there is never any shortage of debate in relation to Google’s many activities, but no matter what your views, this is a remarkable achievement.
Google’s growth to date knows no bounds. The company continues to push into new markets, or even creates new markets where none have existed before hand. From mobile phones, to television and radio advertising, software and online software substitutes, the list goes on. This week they’ve even managed to revolutionize the entire social networking market, and all in the space of a couple of days.
As Google’s march forward continues, could Google ultimately become America’s biggest company? The stock growth rates in the following chart would suggest that the answer is yes:
To become the biggest listed company in America Google doesn’t need to reach the (much derided) figure Henry Blodget made of $2000 a share, to beat Exxon Mobil at todays market price, Google stock needs to hit $1572.50 a share.
That figure may sound insane, but we can look at previous stock milestones to chart how long it may take to get to that figure. Google stock grew from $200 to $700 a share in 30 months. It needs an increase of just short of $900 a share so based on the 30 months it will take 54 months (or 4.5 years) for Google to pass Exxon Mobil based on XOM’s current cap. However if we look at Google’s short term growth we see that GOOG stock hit $500 for the first time on June 1st this year. The $200 leap took 5 months. Presuming a similar growth rate Google will become America’s largest company by approximately October 2009.
Growth rates are rarely static so calculating possible time frames is guesswork at best. Exxon Mobil has seen healthy stock increases over the last 5 years so it is likely that its market cap will increase. And yet Google’s growth rate continues to accelerate as well; it took 23 days for Google’s stock to increase from $600 to $700 a share. Analysts are already talking about $800+
Some will deride the notion that Google may become America’s largest company by the end of this decade, and I don’t completely blame them, however the evidence would suggest that Google is heading in that direction. Google is already arguably the most powerful company in the history of the world, controlling so much of our daily lives; it’s not unreasonable to think that it may become the richest company one day as well.
C’mon Duncan:
“Google is already arguably the most powerful company in the history of the world, controlling so much of our daily lives”
That’s ridiculous comment-bait. Show us some respect, will you. Putting “arguably” in front of the statement isn’t an excuse. I don’t even have to explain why.
MikeW
name a company that knows more about individuals world wide? You cant. Even Governments don’t know as much about people as Google does. I’m not suggesting this is good or bad, only that it has some basis in truth.
In the end its earnings, not hype that drive the long term value of a company. Microsoft was hyped in 1999, and it hasn’t gone anywhere in terms of stock price in 7 years (even though revenue and earnings have tripled). Its going to take some time for Google to grow into its new skin (high stock price), before it can go any higher. And, for Google to double its revenue and earnings is a huge proposition, let alone triple.
Remember, XOM trades at a multiple of 10, wheras google trades at a multiple of 50. If google’s multiple compresses, it will need to increase revenue 10 fold to reach XOM - highly unlikely - I just love it when non market savy people try to describe stock market behavior!
“in the history of the world…controlling [us]“. Are we and this tiny sliver of time [read: tech bubble that most people don't care about] that we live in so goddamn important? C’mon!
Think what lack of foresight, politics, direction, perspective, ambition, etc. can ultimately do to a company.
Was there just too much politics?
Were the Administrators just not motivated enough to care about the future?
Was innovation not rewarded?
This is really not a lesson about Google; it is story about business politics and the draining of creative thinking. Did anyone learn from the lesson of Google and the failures of the others.
Now EVERYONE is suddenly scrambling to compete after YEARS of apathy.
They have even gotten to the point of engaging the public’s help for suggestions and feebacks in the form of corporate blogs. Years ago their egos were just tooGo*Damn big to engage their users.
can anyone say “Advertising Bubble”?
@Duncan,
I agree with Dheeraj, a multiple of 50 is not sustainable. Make no mistake, I too am a big fan of Google and many of its’ products. However, a multiple of 50 has never been sustainable, and it won’t sustain now. This said, I do think that Google will maintain a significant market cap, just not $200+ billion.
Duncan … arguably most powerful company in the history of the world … I hardly think so. This is an overhyped article. Google’s dominance could be taken away by the next hot startup, much as Myspace has had its market share eaten by Facebook. On the other hand, it’s not so easy to kill a mining or oil giant overnight.
George
I think Google will keep growing for the next 5 years, and then some other company will overtake them
Google is the first true behemoth of the Internet age. Whether it takes 5 years or 15, if it doesn’t completely stumble in the meantime, it will become the most powerful and valuable company in the world.
It’s articles like this that are classic signals of market tops. In a year or so we’ll look back on this and laugh our asses off. Duncan, welcome to the Henry Blodget club.
And what will the rest top 4 do till then?
Just wait and let Google overtake them..
>The company continues to push into new markets, or even creates new markets where none have existed before hand. From mobile phones, to television and radio advertising, software and online software substitutes, the list goes on.
Which one of those markets didn’t exist before?
Ok granted that they rule the search market- but there is no single other product that they dominate so well. Google Checkout got the hype and so now is OpenSocial. It all matters if the product sustains the market (and not by just gaining that hype)
Just my 2 cents…
The auction for IPO allocation didn’t really go to plan, as the big merchant banks wouldn’t play ball, and ended up fixing the price amongst themselves. The reason why it hasn’t been done again is because these buyers who scoop up the allocations are the gatekeepers to the IPO market, your either give them and their clients a lower price, or you won’t be getting much market action on opening day.
The auction price was $85 and it closed on the first day at $108. If the auction process really was fair, the price would have been much closer to first day closing.
This article is too sycophantic in nature. This is too much hype. Goog does create nice products. I am not sure if the founders think so high of their company themselves……
Don’t know if the chart was intended to be inclusive, but I noted:
Cisco: $196B Cap
Apple: $163B Cap
Intel: $155B Cap
Each is missing. So why does Conoco Philips make the chart?
(Asking kindly, not arguing, for sake of mis-translation)
The problem is… If Google founders pass away 100 years old. Stock would go plumming and stay $200 again.
This has passed from a good analysis of the growth of a company to the love rants of a fanboy. Google is powerful no doubt but it’s nowhere even “arguably” the most powerful company in the world. First off, what exactly is power? Influence? You can’t fathom the influence the big oil companies, financial institutions etc have on the politics etc of the world. Second, you discount the fact that although Google is very dominant in its domain, its still limited by the reach of its domain. Can somone compare the pervasiveness of the internet compared to let’s say Coke or Oil? Besides, it’s still debatable whether market capitalization is the best figure to use to compare the relative strenghts of all these companies.
Danger, danger. Google Kool Aid Alert.
Look, Google is a great company. But its stock is way into bubble zone.
There was a great article in the Economist of the difficulty they’re having in managing such rapid growth. They’re trying to be the new Microsoft with 1/10th the employeees. Further, they still have a lot to prove if they are going to become America’s #1 company. I mean A LOT. Personally, I think Techcrunch is overdosing on Google and Facebook Kool Aid.
Where’s Comcast?
google is going bigger and they care a lot about its satust and they will try to attack evry body they are going to change there logo to “be evil”
Compare Google with its Chinese competition BIDU, and Google doesn’t look quite so exciting.
Comparing Jan 2006, with Nov 2007
Google is up 69.5%, while
BIDU is up 513.4%
Louis (#17)
I started with the Fortune 500 2007 list until I realized how much it had changed, so to answer your question: no, it’s not meant as being a definitive list of the top x companies by cap…just illustrative purposes with some big non-tech names for comparison.
As for the rest thinking about Googles power: just think about how much information Google has on every single person. Think hard. The notion of Google being powerful through its unsurpassed information repository isn’t new (ie I didn’t make that line up)…but I happen to believe it to be true. There is no other company on the planet that has that level of information, and information = power. Lets just hope that Google continues to use that information for good
In any case, 5 out of the world’s top 10 biggest companies in terms of market cap are Chinese now. US only has three.
Farooq
I think the notion is a hard ask, but I wouldn’t have thought Google would be this big now either, the evidence would support the notion.
Imagine Google in 2010. Google grabs a big slice of mobile spectrum and is now one of the biggest mobile providers in the US. They do the same in the UK. Their Mobile OS now powers 50% of mobile phones. Switch on cable and you’re getting your TV ads delivered by Google (they are already trialling this in the UK). Radio: Google ads, they’re working with Sirius and old-fashioned providers now. In Australia Google is the biggest provider of US internet traffic. Google starts extending capacity on the Pacific link and ties in South East Asia via Guam, quickly establishing itself as a bandwidth provider (either retail or wholesale) in Singapore, Malaysia and Indonesia. And lets not forget Google’s massive acquisition war chest: just think about what they might buy with all that cash: they syndicate AP now, imagine them buying AP or Reuters? a newspaper group, or even a TV network…cash is the only limit and they’re not going to run out any time soon. Googlezon may yet come true
… it will be an interesting world where Microsoft is seen as the approachable, viable, open yet smaller competitor to Google.
That world might already be here
hey… at least this wasn’t another facebook article and to Duncan’s credit, he did give a perspective and that’s what you want from TC…. some analysis and a different perspective.
heh, more and more you’re quoting reasons why this company should be feared rather than admired. You’re right in saying that information is power. I think Google will have to make big moves into media before their stock climbs along the progression you show. And I predict that they’ll be regulated or severely put down in the process.
You bet they’re big. Google is now worth more than all the other web giants combined: http://fishtrain.com/2007/10/3.....e-big-web/
In addition, Google has made a major move with OpenSocial and with the rumors involving GPhone and their Internet Wi-Fi play. What do you think? I think they will, no doubt, be the largest company in the world in 5-10 years.
My wife (who is not particularly techie) won’t use a Gmail account because to quote her, “I don’t want that bloody company knowing everything I do”.
Ok, it may be a bit late for that, but I think the biggest threat to Goggle’s expansion is a user backlash. There may be a pent-up demand for a real Google alternative.
I have worked for a niche internet company since 1996. When we started the internet promised more openess, less control. However, if you run a site you are almost certainly reliant on Google for traffic.
If Google drops your listings down the search order, (for whatever reason) you are going to lose money. They have become a filter through which most of the internet flows.
So when we started back in ‘96 we did so because we wanted to do our own thing. Now we find that we run our business at the mercy of another company.
So what does any of that have to do with the share price?
Simple - people will want and look for alternatives, it starts with Techcrunch readers and slowly percolates down to mainstream users.
Whether it is justfied or not people become wary of companies that expand into more areas of their lives.
It might take a few hours to replace Google product in a big country (e.g. China) with anther product (e.g. Baidu). This is impossible to do with OS or oil products. So where is that Google power? Just a random thought.
Google has:
-A PE of 55
-A single proven revenue stream (CPC ads)
-A bunch of products that are not accretive.
-Too many employees.
Sounds like Y! in 2000.
Now can they do a better job than Y! did of leveraging their market cap to buy stuff that diversifies their revenues? I don’t know. We’ll see. But if they don’t, look for a PE of 10-20 and a market cap based that multiple of earnings.
“There is no other company on the planet that has that level of information, and information = power. Lets just hope that Google continues to use that information for good”
Hi Duncan,
Let’s agree that Google is a great company. At the same time, however, there is no way that Google has more “real information” about people in the United States than the US Govt. does. Search behavior, while valuable, isn’t quite nearly as tangible about other information that is available to our government (name, address, ssn, earnings, etc.).
A real threat to Google is that the power that they do have in the marketplace will eventually lead to greater regulatory pressure from our (and other) government. And while they have a lot of cash for acquisitions, those acquisitions will gain greater scrutiny if any move seems to create a potential monopoly. In addition, as we’ve seen with the Chinese government, there’s also the potential that a controlling government may force “homegrown” products on consumers and/or provide favoritism to that product.
Every internet company that I can think of has had tremendous growth in stock for a long period of time. As growth starts to flatten (infinite growth is not possible), then the stock price starts to deflate. There will be a time when Google’s stock takes a major hit & it could happen if the US were to slide into a recession in the future.
The way Google is heading seems it will be acquire first position within couple of years.
I have to warn you people! THIS MAKES NO SENSE!
Google dosen’t even exist! But, their stock is up 700%?
SELL NOW!
Beat reality! NOW!
http://fakesteveballmer.blogspot.com
The problem is all those other companies on the chart have diversified holdings. Google is a one trick pony at the moment.
Google’s entire income comes from little text ads that front this enormous store of “knowledge”. When it comes to diversifying their revenue they have failed magnificently. They are subject to 1) a downturn in the ad business (which is inevitable) and 2) regulatory oversight of how they can use all that “knowledge” which, in the coming Democratic regime, is also pretty inevitable.
This article from the NYT might cool your fever:
http://www.nytimes.com/2007/11.....2adco.html
Geez, Duncan! Your ignorance never ceases to amaze me.
See Google? It’s a Search Engine. It can be used to LEARN something or to verify facts.
See the company right after Google on your chart? Know the name of it? I didn’t think so!
It is unbelievable to me that you have TWO typos in the name of the SIXTH LARGEST company (according to your figures).
It’s really not that hard to spell the name of a company correctly, or to use the right punctuation. Hint, the company name does NOT have the letters “N” or “D” in it. It also only has one “A”, and one “O”. And one more symbol than you had.
Cmon Duncan, pick up the quality of your articles (in content and accuracy), or, as a reader, I’m going to have to fire you (and go elsewhere).
I love Tech Crunch. Best thing since the Onion.
Is Duncan even a real person? April fools is in, um, April.
The quality of Techcrunch doesn’t stem from its analysis but from the fact that they get the news first and is the only place to share rumors. So who cares about the fact that Duncan may not be the best stock analyst in the world? google will get bigger and bigger, for sure…
Not one of these comments comes from the perspective of a media buyer or a business marketer. Google is not a one trick pony or an ad network. They are an entirely new layer of media with the potential to be much larger than all other advertising media combined. Because they don’t create content they are scalable beyond any other media model. This is the secret sauce that will drive the growth curve.
I work with many small to mid-sized businesses and very few have even begun to tap into search, probably less than 5%. This is a huge untapped opportunity. It’s easy in the techie world to lose track of the real world. There are millions of businesses out there that could profitably move all of their marketing budgets into Google alone and improve their reach. I’m not a fanboy, I see how search advertising works for SMB and I’ve seen how the management responds. One company I work with went from a $1 million Google spend in 06 to a $4 million spend this year because they know it works. And that is pure profit for the Goog.
There are signs for a quest for the Google’s alternative already:
http://www.newsweek.com/id/62254/page/1
http://www.nytimes.com/2007/06.....4digi.html
I have one question. So is Google now what Microsoft was when it was dominating the software industry?
Beauty is in simple things.
The ceiling for a company’s value is the point at which no other company can afford to acquire or take over a company.
Despite Google’s meteoric rise, its ultimate valuation comes down to whether it is possible for another company to acquire Google with debt and have Google’s cash flow service that debt and provide a risk adjusted return that is better than industry alternatives.
Unfortunately, the number of outfits who would issue debt to fund a Google acquisition at these levels is probably quite slim, and the existing cash flow wouldn’t service more than $70-80B worth of debt. Now how many players are willing to put $30B of their own cash down and leverage their own balance sheet for an additional $120B+?
Any takers? Didn’t think so.
It displays a spectacular ignorance of history to call Google the most powerful company in the history of the world. Hudson’s Bay Company? British East India Company? Standard Oil (which at one time controlled nearly all oil production in the US). In fact it’s more than ignorant, it’s flat out offensive, implying that an exuberant market capitalization is somehow more significant than companies that, for better or worse, were critical in shaping entire nations and continents.
Yawn. Wake me up when Google gets significant market position in anything other than ads. They’re the most likely the least diversified company within the top 100 companies by market cap.
I don’t think you can appropriately say information = power in Google’s case. Are they going to blackmail me? No. Do I really care at the end of the day that a lot of my information is passing through their servers? No.
If Google just up and flopped, sure I would be sad… and then I would move on to Yahoo! or one of the other dozen big seach engines and email providers.
To further put Google in a proper perspective, imagine Microsoft doing the same thing–completely shutting down in a day, denying access to existing copies of Windows installed on machines. Can you imagine the chaos? What is the alternative for day-to-day users and office workers when they’ve spent their entire lives working on a Windows platform? While Mac and PC have kind of met in the middle in terms of features and functionality, the software hasn’t when it comes to compatibility.
Sure, having banks of information on consumers can give you an edge in business, but control over their behaviors and ultimately their lives is the true measure of a company or brand’s “power.”
Google is large, but comparing it to an oil company? How can they justify themselves a huge valuation over a company that controls a raw material? That’s like saying that they’re more important than transportation, banking, or the internet itself.
There can always be another google, there’s just no justifiable alternative at the moment.
It’s this kind of writing that indicates to me the clear bubble that’s emerging. When tech companies and writers about them think so highly of themselves that they herald their indispensable nature to the world, when many people across the planet can wake up and not go a day without using them.
This posting is obviously a troll to the well read and clear minded. If you want a job at Google PR, just submit your resume like everyone else.
Of course Google is powerful, that isn’t really the debate here at all. The real debate becomes what happens when Google has a share of the mobile phone market, cable television, web advertising, web hosting, documents, calendars, emails and your analytics from your personal or corporate web site.
Try imagining a world where you edit your Google hosted docs on your GoogCell and when you get home at night all the ads on your GoogTV are relevant and targeted.
Google will only continue to grow. Is it good for the consumer, yes; for now. Is it good for industry, yes; for now. Is it dangerous at some point, yes.
Where is that point?