Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Is Google Inc. Stock Overvalued?

By Daniel Sparks - Mar 26, 2014 at 1:00PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

It's increasingly difficult to justify Google's valuation. Is it time to sell?

Google ( GOOGL -0.68% ) 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.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Alphabet Inc. Stock Quote
Alphabet Inc.
GOOGL
$2,840.03 (-0.68%) $-19.29

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
624%
 
S&P 500 Returns
141%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/04/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.