For all the news about and from Google this week (including its purchase of Reqwireless, a Web browser and e-mail software start-up in Waterloo, Ont.), the most "spectacular" is Caris & Co. analyst Mark Stahlman's thesis that Google shares could be worth $2000. It sounds eerily-like a technique a little-known Henry Blodget used at CIBC Oppenheimer when he put a $400 target price on Amazon, which eventually led to a big job at Merrill Lynch. Stahlman's $2000 implied share price is based on the belief Google could eventually have revenue of $100-billion a year - compared with $9-billion this year based on the company having 1% of the $10-trillion digital services market. (now worth $2-trillion) "In our opinion, Google will not be limited by the size of today's advertising market and is likely to expand into next-generation financial services and healthcare, among other digital services opportunities considerably larger than typically recognized," Stahlman said in his report, which upgrades Google to a "1*/buy" from a "2*/buy". Stahlman's report puts the spotlight on what appears to be a game of one-upmanship among analysts covering Google. Given the company's popularity and growth, it no longer appears to be enough to have a "buy" rating on the stock because everyone - except for Gomez & Co.'s Philip Remek - has a "buy" on Google. The new game - at least until Google has disappointing earnings and people jump off the bandwagon - is writing research with some sizzle such as a $2000 stock price. Another way to view it is as creative thinking by analysts unwilling to follow the pack. As much as analysts should do research using financial models and established metrics, it is also encouraging to see some them thinking outside the box even the ideas seem bizarre.
Some other views on Google and $2000 can be found here (Wharton grad), here (Mathew Ingram), here (Om Malik), here (Henry Blodget) and here (Paul Kedrosky).
Update: Sunday's New York Times wades into the Google stock phenomena with an article that dismisses Piper Jaffray analyst Safa Rashtchy as "relatively obscure". Anyone who follows the Internet would find this description puzzling given Rashtchy's profile. Then again, the NYT quotes Blodget's blog so read into that what you will.