If the [[YHOO]] deal goes through at $31/share, that gives Yahoo a 61 multiple. If you valued [[GOOG]] by the same metrics, Google should be trading at $779.58.
Rhetorical Question: If the P/E ratio is determined by growth, and Google is growing almost twice is fast, shouldn’t Google get a higher multiple?
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The market will come back to reality next week. In regards to GOOG, yes. However, in these market conditions, money is made on volatility. Look at XOM, actually closed down on RECORD revenues. I need to get into the oil business. They bank some MAJOR coin.
DOW 14,000. Fuckin retards. Some people have to learn the hard way.
It’s actually worse than that. The 61 P/E is YHOO’s forward P/E. GOOG’s forward P/E is currently at around 20. If one were to attach the idotic P/E MSFT is offering for YHOO to GOOG the shares would trade in excess of $1500.
In regard to your rhetorical question, the irony is that YHOO has been given a big fat premium multiple for years purely because they suck at what they do. Companies like MSFT assume they can pay out the nose for YHOO because they assume they can’t possibly manage the franchise worse than YHOO has.