Internet

How high can Google fly?

Quinton Bronkhorst

 ·16 May 2013

Google‘s shares have climbed over 25% since the start of the year, breaking through the $900 mark after its I/O presentation on Wednesday (15 May 2013).

This places the world’s largest Internet company in a solid second position behind Apple when looking at the world’s largest tech companies by market capital.

Google now has a market capiutalisation of $303.1 billion, while Apple still commands the top position with a market cap of $402.5 billion.

Top 10 tech companies by market capital

Market cap data taken from Bloomberg. Accessed: 16 May 2013

Apple and Google have shown contrasting trends over the course of 2013 so far, with the tech company leader having lost over 20% of its share value since the start of the year.

Apple’s shares are currently trading at $428.85, down from $549.03 at the start of the year – and almost 40% lower than the company’s 52-week high of $705.07.

Google, on the other hand, has seen its share price climb to an all-time high of $915.89 – up 26.6% from its $723.25 start in 2013.

In its last quarterly reporting, Google said that it generated net revenue of $9.83 billion – up from $8.13 billion a year earlier.

Google’s successes

Google is involved in a multitude of areas – from fibre broadband and Internet services, to mobile software, handsets and futuristic gadgets and technology.

Google’s Android platform currently dominates the mobile phone operating system market, running on over 750 million mobile devices. Google’s executive chairman, Eric Schmidt, expects that number to climb past 1 billion by next year.

Then there’s Google’s online video service, YouTube, which sees over 1 billion eyes on its pages each month, watching over 4 billion hours of video. While the service is free, and remains free, the internet giant recently launched subscription channels on the platform in a bid to bolster production quality.

Of course, where Google is most prolific is in its ad and search space, where the company goes largely unchallenged, dwarfing the competition from Microsoft, Yahoo and AOL.

Still some troubles

On the down side, Google faces its own problems: the company is under scrutiny in Europe as its rivals tackle it over anti-competitive behaviour and tax concerns – and that’s on top of a number of patent disputes taking place involving the company’s mobile arm, Motorola Mobility.

Google acquired Motorola Mobility in May 2012 for a massive $12.4 billion – and the company has continued to drag on Google’s financials, with another loss of $271 million in the first quarter of 2013 being the latest to weigh in.

While these concerns clearly haven’t made much of an impact on Google’s results, there are other concers as well.

With a P/E ratio of 26, Google’s stock is an expensive purchase – especially in comparison to Apple’s P/E ratio of 10. According to reports from CNN and MSN, there are also concerns amongst US investors that, like Apple’s peak in September 2012, the company’s stock is over-owned.

Despite this, however, analysts have stated that Google has the potential to hit $1,000 per share.

Though CNN’s Paul La Monica is quick to remind us that many said the same about Apple after it broke $700 last year.

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