Google's stock busted past $800 Tuesday, the latest barrier that this increasingly powerful ad company has stormed through with ease.
Shares of the company, which uses technology products to lure consumers to share personal details used to target ads, are up 14% this year. Google's success comes as it has not only largely beaten government efforts to curb its growing dominance but also eroded Apple's power in mobile.
The fact that Google's stock closed at $806.85 isn't meaningful by itself, but the rally is "reflective of the fact Google is still doing well," says Ryan Jacob of the Jacob Internet fund. Google's rise is important in that it:
Widens relative market power. Google, which went public in August 2004, now is worth $266 billion, making it the third-most-valuable company in the Standard & Poor's 500, behind only Apple and ExxonMobil. Google is worth more than Warren Buffett's Berkshire Hathaway and General Electric. Apple has fallen nearly 14% this year.
Marks the end of lingering investor concerns. Google stock was a laggard last year, gaining 9.5%, trailing the 13.4% price appreciation of the S&P 500. Investors had lots to worry about, including regulatory probes and concerns it would be less profitable as more users moved to mobile, says Rick Summer of Morningstar. But Google's regulatory issues have been largely resolved, he says. Investors are pleased to see Samsung is outselling Apple with its smartphones running Google's Android operating system, Jacob says.
Proves the profitability of collecting personal information for ads. Google's rising share price reinforces the profit power of what Google does, Summer says. That's especially true with Android: "If you use Android, Google knows what you're doing, be it viewing a Web page or performing a search," he says. "That's making their database that much richer."
Investors are wondering what's next. Shares of Google sport a trailing P-E of 25, more than 50% higher than the market. Google shares are about 8% overvalued, Summer says. But with shares soaring, questions about Google's dominance are put to rest. "The gap has closed," Jacob says.
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