Barron’s says Google Overpriced – Duh!

Back in January 2006 I made some interesting predictions about Google and their stock price. While they didn’t really pan out, they did double their over all value, even if their share price is only double what it was 18 months ago. ;-)

Well, now it seems some people are starting to get a little afraid of the big (NASDQ:GOOG) and are starting warn people that it might suddenly deflate in value.

Google Inc. shares, which topped a milestone price of $500 a share last week, are overvalued and poised to fall, just like peers Amazon.com Inc. and eBay Inc. did, the weekly financial newspaper Barron’s reported on Sunday.

Barron’s said Google is overvalued because it trades at 37 times next year’s expected earnings and because its growth rate is slowing. It also noted that Google now has the 15th largest market capitalization among U.S.-traded shares, and its price-to-earnings ratio is two to three times higher that of similarly sized companies.

^{Google shares set for fall: Barron’s – Reuters}

Now, while I don’t deny that the amount of craziness surrounding the Google stock price has just been… Extreme, I would be very surprised if this forecast does in fact slow things down any for Google in the short term.

Having said that, I do still stand by my statement from January. Everything surrounding Google is still much hype. Google Reader v2 was a nice change, but the hype that surrounded its release was just crazy. Same with Google Spreadsheets and several other products. Not to mention the absolute idiocy around the YouTube purchase this month.

Eventually it’ll wear off and people will scale back on what they spend on Google shares. This little jump over the $500 mark (currently $505 as I right this) will wear off and I think we’ll see it settle back in the mid-400′s again. Well, I hope so at least.

I do think Web2.0 is going to be famous for the amount of money wasted, however its not a Bubble as a lot of people claim. This time real money is being made using real products, not whims and fantasies as it was previously.

Having said all that, I’m not a broker. I don’t play the stock market and anything I say here should definitely not be taken as advice on how to spend your money. It is merely my own opinion as a guy that watches the tech industry.