Google (NASDAQ:GOOGL) stock has been on fire recently, soaring past $1,000 last year and gaining a total of 43% in the past 12 months. With such an incredible run-up in the stock price, it's a great time to revisit valuation. What's the stock really worth?
Fool contributor Daniel Sparks recently ran some numbers to come up with a ballpark figure for the fair value of Google shares. Using a discounted cash flow valuation model with a 10% discount rate, Daniel suggests that Google is fairly valued at best.
But even if Google stock were overvalued, it probably wouldn't be wise for investors to sell. As long as the underlying business is meeting or exceeding expectations, it's usually best for shareholders to hold even when shares seem overvalued. Of course, if shares get into grossly overvalued territory, that would be another story -- but Google isn't even close to that point.
Find out more in the following video about how Daniel valued Google.
Daniel Sparks has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Google. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.