As the summer of 2004 lingers on, stock market screens are looking like The Matrix, and Alan Greenspan is sounding like a motivational speaker rather than a monotonous soporific tranquilizer. Even terrorist scares and false Penn Station bombing alerts don’t move the market much these days.
Iraq is still the number one swearword in the US, and there is nothing but disappointment at our choices for president in November. Even as I write, I am filled with dread at the thought of another two to four months of this ennui.
Some hedge funds are having trouble finding places to put their money while others are churning themselves as if they were on a treadmill. Even the Asian surge, which was exciting for a while, seems to have quieted for the moment.
So with all this negativity lingering overhead like cumulus clouds that gather but never burst, what will catalyze a return to the high-volume, heady bull market days? Google! Google? Yes, Google.
Well, actually, no. Most Wall Street people I speak to don’t think Google is going to save our souls. ‘People are excited about Google not because it is so exciting, but because there is nothing else to talk about,’ comments one hedge fund analyst. ‘What’s more, Google has gone about bringing its stock to market in a way that couldn’t make it any clearer it wants to be considered as a distinct entity, separate from – or maybe even above – Wall Street in some ways. So why should the Street be excited about a company, no matter how big or successful, that is clearly aloof and wants in no way to be this market’s savior?’
Another analyst offers a more complex opinion of the company’s listing. ‘If it proves successful, it could be the beginning of more Dutch auction IPO offerings, as well as an influx of technology company IPOs,’ he explains. ‘However, if Google experiences some difficulty, as I suspect it will with such a high initial valuation, it could have a short-term drag on the market in general – and technology stocks in particular – because of its high profile and lofty expectations. Also, many institutional investors will be hesitant to participate in the IPO due to its high valuation.’
‘You could compare Google’s IPO to the Yankees’ failure to win the past few World Series, and their failure to hold the sport of baseball on their shoulders as many hoped,’ says one cynical trader. ‘I am not saying Google will disappoint for sure but the point is that the company can do nothing other than meet expectations or disappoint the market. It can’t exceed expectations because they are too high. The stock is going to open above $100 and do what? Go to $200? I doubt it.’
While these statements paint an anti-climactic near-future picture for Google, there are those who have more optimistic hopes for the company. An investment banker friend of mine, for instance, is looking at the bigger picture. ‘Let’s not confuse the future of Google with the future of the market,’ he comments. ‘Google never pretended to be any sort of savior; the desperate traders and brokers are the ones who hope its IPO will add a spark to a dead market. That said, there is no reason for post-IPO Google to be anything other than it already is: a wildly innovative and successful company whose stock, at the right price, I would love to own long term.’
The truth of the matter is, regardless of what happens with the price of Google’s stock or its governance and IR policies, it has already helped the market simply by giving us something to talk about. That may sound overly simplified and not very technical, but in times like these, even the hope of something positive can give the market short-term life and buoy it long enough for another Prince Charming to rescue it from the summer dragon.
