Google Inc (NASDAQ:GOOGL) can see the trends that will pay off in the long term and places its bets accordingly, Scott Kesler, senior director of S&P Capital IQ, said in a discussion on CNBC.
The comment about the technology giant comes as it marks its tenth year after its initial public offering. Google Inc (NASDAQ:GOOGL) now has a market value of about $390 billion, the third largest market capitalization of any U.S. group. Furthermore, according to eMarketer, cited by CNBC, the online search and advertising giant will make $44 billion in net advertising revenue this year.
The rise of the company’s stock has been so monumental that if an investor bought the stock at the initial public offering and held on to the shares, that investor would have made a 10,000% return, it was discussed in the report.
Kesler pointed out that his firm looks at stocks using a short time frame and added that S&P Capital IQ’s 12-month target price for Google’s stock is $650 with a ‘Buy’ rating.
Nonetheless, Kesler also discussed the current challenges Google Inc (NASDAQ:GOOGL) is facing 10 years after its IPO. Commenting about Google’s decline in U.S. mobile advertising revenue from almost 50% in 2011 to 41% in 2013, the senior director said that he thinks this is not a big concern for the internet giant. He said that even though Google has work to do in this regard to try to improve their mobile ad revenue share, the company still has a very appealing display ads for mobile.
Moreover, Kesler noted when asked about the seemingly “drunken spending” Google Inc (NASDAQ:GOOGL) has done over its acquisition strategy that he believes that the company can see very far into the future and place its bets using this vision. Kesler also gave YouTube as an example of how the company’s approach works.
“People thought that the company was making a bad decision when [about] eight years ago or so they decided to pursue the acquisition of YouTube for about $1.6 to $1.7 billion. […] Now, I’d argue, YouTube is one of Google’s most attractive and valuable assets. So, they really can see long-term,” Kesler explained.
Disclosure: None
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