GOOG: 160% Overvalued, Financial Backlash Begins?

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I could be jumping the gun here, i'm not exactly know for my investment skills, but following a CNN Money report earlier in the week that criticized the GOOG business model comes Fortune asking "Is Google Really Worth It?". They say that GOOG may be up to 160% overvalued, and I wonder if we're seeing the first signs of a financial backlash.

But before you go out and buy oodles of Google, consider this: The stock may be overvalued by as much as 160%. Its shares are trading at 79 times trailing earnings—compared to other Internet stars like Yahoo, which trades at 72 times earnings and eBay which is valued at 57 times earnings. But hardly anyone is sounding the alarm. Virtually all of the analysts who follow the company on Wall Street have a "buy" or "strong buy" on the stock. And Google is one of the largest holdings at top-ranked mutual funds such as Legg Mason Value and Marsico Focus, among others. But take a hard look at the numbers and you'll wonder why.

Im really in no position to comment other than that when I notice 2 well respected sources of financial/investment commentary criticizing Google in one week, it starts an obvious train of thought...


Investment houses generally

Investment houses generally tell you to buy when they have inventory to sell. If it was such an awesome buying opportunity, do you think they would share?

I thought it was overvalued

I thought it was overvalued at 100$. Even that was 25 times earnings. If they pull something cool off apart from adwords then who knows? They might even be worth it.

You have to have it

Fund managers have to have it in their portfolio even if they bought in at the top, it makes them look bright, like they didn't "miss it".

Once its in everyones portfolio, the reality distortion goes into overdrive (79 times trailing earnings) in hopes of keeping lipstick on the pig and maybe squeezing a few points out of it, when that fails, they are the first to bail and the suckers are left holding the bag.

Wall Street is pretty much "same movie, different actors", it happens all the time.

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