Google stock price soars above $700
Published: Thursday, November 1, 2007 at 6:01 a.m.
Last Modified: Thursday, November 1, 2007 at 12:00 a.m.
SAN FRANCISCO - Google Inc.'s stock price barreled through $700 for the first time Wednesday, propelled by a belief that the Internet search leader will become even more profitable as it plants its products and services in new markets.
The Mountain View-based company's shares traded as high as $704.79 before falling back to $700.04 in afternoon trading, up $5.27 for the session. It took less than a month for the stock to leap from $600 to $700, building upon a fervor that has lifted Google's market value by more than 30 percent since mid-September.
During that 6 1/2-week stretch, Google has created an additional $53 billion in shareholder wealth. That dwarfs the total $41 billion market value of another Internet icon, Yahoo Inc., which had a 4-year head start on Google.
The latest surge came after Google confirmed plans to become a bigger player in the Internet's social networking scene, which could morph into an advertising hotbed.
Investors also seem enthused about reports that the company is about to unveil a long-rumored operating system designed for mobile phones so it can make more money by distributing ads to people on the go.
The recent rally has made Google Silicon Valley's most valuable publicly held company, supplanting Internet networking supplier Cisco Systems Inc.
With a market value of nearly $220 billion, Google also is now worth more than Warren Buffett's holding company, Berkshire Hathaway Inc., whose steadfast refusal to split its stock during the past four decades has left its Class A shares at nearly $130,000.
Google co-founders Larry Page and Sergey Brin, who regard Buffett as an inspiration, so far have resisted requests to split their company's stock so more people could afford to buy a few shares. Their theory: A high stock price tends to attract more patient and knowledgeable investors who pay closer attention to a company's long-term strategy than its ability to hit short-term earnings targets.
The philosophy has generated impressive returns so far. A $10,000 investment in Google's stock at its August 2004 initial public offering price of $85 would now be worth about $82,000.
Brin and Page, both 34, have been the biggest winners by far, with estimated fortunes exceeding $20 billion apiece. At least two other Google executives, Chairman Eric Schmidt and sales chief Omid Kordestani, are billionaires while hundreds of other employees have become millionaires because of their stock holdings in the 9-year-old company.
Wall Street is betting Google is still in its financial infancy, even though it's already on track for a profit of about $5 billion this year on more than $15 billion in revenue.
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