Is it too late for the Google
To put this in perspective, it had only earned $0.73 a share on nearly $2.2 billion in revenue over the three previous quarters combined. After producing $349 million in free cash flow through the first nine months of the year, it wound up amassing an impressive $658 million for all of 2004.
Do you think those who managed to score shares at $85 a pop when the company went public over the summer are happy with their decision? You bet. The stock leapt over the $200 mark on the strong showing.
But is Google overvalued? Now fetching roughly 140 times trailing earnings, it may not find too many vulture tongues wagging. However, explosive growth has a funny way of whittling down stratospheric multiples with every satisfying quarter. Keep in mind that the company's revenue more than doubled in 2004, while its net income more than tripled. In fact, those who bought in at $85 during the IPO were paying more than 200 times the previous year's earnings and we already know how well that played out.
Yet there are more than a few bumps in the road that may test the mettle of this dot-com joyride. Microsoft
After watching even the mighty eBay
That doesn't mean that investors should expect a Valentine's Day massacre when the insider lockup is history come February 14, but it will certainly give investors pause before bidding up the shares too much higher in the near term.
More of our recent thoughts on Google:
Longtime Fool contributor Rick Munarriz is a happy Google user. However, 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.