24/7 Wall St.

Last week we put together a brief description of what sort of multiples and what it would take for Google (NASDAQ:GOOG) to hit $600.00.  This was a mere century mark that was briefly surpassed today.  Perhaps we should have been evauating what a $700.00 Google stock price looks like.  For starters, Google’s market cap at that price would be roughly $218.5 Billion.  Here was the full note for the $600.00 where we gave the time intervals between each new "century mark" of $100 handles.  If Google’s stock price instantly rose to $700 tomorrow and with a static earnings estimate picture, the following ratios come about:

• Based on $15.25 EPS and $11.5 Billion revenues for Fiscal 2007 estimates, shares trade at 45.9-times earnings and 19-times forward revenues.
• Based on $19.50 EPS and $15.75 Billion revenues for Fiscal 2008 estimates, shares trade at 35.9-times forward earnings and 13.87-times forward revenues.

Just last week, Jim Cramer said he was giving this one of the new four horsemen of tech a $700 target, and then said $701 to be higher after Bear Stearns raised his 2007 target to $625.00 and $700.00 for 2008.  These numbers start getting quite high even for a great growth stock, but this assumes no raised revenue and earnings projections out of Wall Street and out of the company itself.

We are getting ready to release our "watch list" of small cap Internet stocks to subscribers of our Special Situation Investing Newsletter.  We do not believe they are current takeover targets, but under the right circumstances and prices these could all easily become subsidiaries of the current Internet giants.

Jon C. Ogg
October 8, 2007