Google Turns 10

The company Google ($GOOGL), which I believe is some kind of Internet “search engine,” went public ten years ago today. On August 19, 2004, the company offered 19.6 million shares to the public at $85 apiece. The stock has since split 2-for-1 so that the $85 price is $42.50 in terms of today’s stock. The stock opened at $100 (or $50 post-split) on its first day of trading.

The shares are currently at $597, so Google is up more than 13-fold since the IPO, which is nearly 30% annualized. If an investor had paid $240 per share for Google, or more than five times the underwriting price, they still would have beaten the market (assuming they held on).

To describe the share history a bit more fully, Google raced to $373.62 (post-split) by November 7, 2007. That’s an amazing gain of 730% in about 3-1/4 years. That’s more than 93% annualized. The shares then plunged by more than two-thirds over the next year.

Measuring from Google’s extreme peak in 2007 to today, it’s been a decent stock, but not an outstanding one. Google has only barely outperformed the Wilshire 5000 (remember that Google doesn’t pay a dividend). But that’s a bit of cherry-picking with the data since the 2007 peak was so dramatic. The shares have gone on to make new highs. In February, Google reached its all-time high of $610 per share.

Google is expected to earn $31.57 per share next year. That’s 74% of their 2004 offering price, which is a nice ROE if you can find it.

Posted by Eddy Elfenbein on August 19th, 2014 at 12:25 pm

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