Valueing Stocks

John links to a great post on valueing companies by Henry Blodget who was Managing Director and Senior Analyst at Oppenheimer & Company and Merrill Lynch & Co, simply meaning that he has a clue of what he is talking about.

In general, always remember that financials are not a science, but an art form. That probably says enough. In a related post he looks at what is behind the valuation of Safa Rashtchy, which currently sits at $600. In there he says that for that to happen, the search market (or rather the market Google plays in, which might also be TV ads) will need to be at $30 billion in 5 years. Ok, might really be. But the thing that strikes me as unlikely is the market being at $30 billion AND Google having a profit margin of 50%! Especially with factoring TV Ads into the mix, they are very likely to have lower profit margins and if they still had 50% profit margins, don’t you think that there would be another player entering into the market?!?!?! And yes, there are others that can break into the market.

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