It didn't take long for Google
So? Where's the stock split announcement, folks? No, it didn't happen. It didn't happen at $200 either. Give that Google once hoped to go public priced as high as $135 a share, it's not as if the company has ever been in a hurry to drive its stock down to more conventional tech stock pricing.
Google isn't alone. Other stocks that aren't afraid of heights include Washington Post
That doesn't mean that Google won't split. It just means that it doesn't really have to. Odd-lot transactions are common these days, and stock splits are zero sum games, anyway. If a stock splits in half, its shares outstanding double. If it goes with a 3-for-1 split, its share count simply triples. It's still the same pie, just cut into smaller slices.
So while there's no harm in speculating on what Google will do on the split front, I think your time is better spent trying to gauge the stock's valuation.
Two months ago, I wrote that Google was cheap at $220, which sounded absurd to some. Well, that $60 billion company is now an $85 billion company. Is the stock still cheap? OK, maybe it's not a screaming bargain at this point, but if you apply next year's analyst projections, which call for the company to earn $6.66 a share next year -- a scary omen, I know -- the stock is fetching 45 times next year's earnings. Is that high? Yes. Outlandish? Not really. I remember when Inside Value pick Coca-Cola
That doesn't mean that I'll be loading up on Google and cheering it towards $400. I think it's one of the greatest companies in the country right now but I prefer to find growth stocks much earlier in their growth cycle. So keep it up, Google. I'll be watching from a safe distance.
More bowling with Google:
- In retrospect, Google was cheap two months ago.
- There is a potentially fatal flaw in the Google engine.
- Learn more about how stock splits work.
- Check out our Rule Breakers newsletter service for more ultimate growth stock ideas.
Longtime Fool contributor Rick Munarriz has never declared a stock split himself, though he did once have a splitting headache. He does not own shares in any of the companies mentioned in this story. The Fool has a disclosure policy. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.