On tonight’s MAD MONEY show on CNBC Cramer said that Google (GOOG-NYSE) got hammered after earnings that Cramer said was a blow-out report. Yahoo! (YHOO) rose on bad numbers and eBay (EBAY) rose on so-so numbers.
In Cramer’s world he said you don’t have to stare at the past and you look ahead in the mad world. Cramer has 2 kinds of growth: 1) accelerating growth and 2) decelerating growth. Cramer thinks some fund managers will only pay up for accelerating revenue growth. Both YHOO & EBAY are broken stocks to Cramer, but they are rising in "What’s bad is good" world and now it is back to an accelerating growth story because the prior year was so bad. EBAY is one that did poorly before and it was so oversold that the first good news created a huge move.
GOOG’s growth was 99% and that can’t be topped, so now it is 40% growth. Cramer said it is #1 in Cramer’s universe. The big funds that buy accelerating growth sold it off, but he thinks now uyuou have to like GOOG for reasons other than just the growth. It’s a monopoly on paid search and has 70% share in some areas. He thinks this won’t get a 70-multiple anymore because of decelerating growth. He is still sticking by $600 target but it will take a while now. In the near-term he thinks this is going lower. For it to have a 30% updside discounting this would have to drop to $450.00 and that is where he thinks it will go.
As I noted yesterday, Cramer was changing his tone on the wildly bullish stance on GOOG like he has been maintaining. He says he’s still sticking by it longer term but it’s probably going down.
Jon C. Ogg
February 2, 2007
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