WALL STREET Google investors get to gloat as stock passes expectations

Google investors sit tight as the stock price doubles.
NEW YORK (AP) -- To all of the Wall Street naysayers, the talking heads and the bearish doubters, Cyndi Mackell and her 120 shares of Google Inc. have something to say.
"Told you so!" she said with a laugh.
Mackell and other individual investors who jumped at the chance to buy Google stock in the company's initial public offering two months ago can be forgiven for a certain amount of smugness. Having bought shares at $85, Google investors have more than doubled their money and have silenced the numerous critics of Google's Dutch auction IPO.
"The fact that they surprised the market does not surprise me, as it's apparent the market has continuously underestimated the opportunity for Google," said Jake Kaldenbaugh, a business development manager in San Francisco.
Impressive run-up
Since its IPO on Aug. 19, Google has seen one of the most impressive run-ups in share price since the heyday of the dot-com era -- a 114 percent jump from its offering price as of Tuesday's close. But unlike the dot-com era, few investors seem to be cashing out for the quick buck.
"The number of people who have bought Google and held on to it is really surprising," said Jeff Seely, chief executive of Sharebuilder.com, an online brokerage that allows individual investors to accumulate shares through regular partial payments. "It's a new stock, but it's regularly in our top 10 stocks that our customers want to accumulate."
Seely said that of the more than 5,000 Sharebuilder.com customers who have accumulated Google stock, only 13 percent have sold part or all of their shares.
Back in August, it was easy to underestimate Google as a risky, immature company. When it announced a target price of $108 to $135 per share, conventional wisdom held that the price was way too high, and would discourage the mom-and-pop investors that Google seemed to target with its open auction.
When Google lowered its target price to $85 to $95 per share just before going public, analysts thought that the auction system had failed miserably. A final price of $85 seemed to justify the feeling.
Steady rise
On Aug. 19, Google let its stock do the talking. GOOG opened at $100.01 its first day of trading and has steadily risen ever since, closing at $149.38 on Oct. 21, right before its earnings report was released.
The earnings report was really the last chance for the company's detractors to make a stand, but Google silenced them. For the third quarter, Google earned 70 cents per share, far outstripping Wall Street's expectations of 59 cents. The company brought in $805.9 million in revenues, more than twice the $393.9 million from the third quarter a year ago.
The next morning, Prudential Securities, which had already rated Google a "buy," increased its price target on the company to $200 per share. At the start of trading on Oct. 22, Google opened at $170.32 and closed at $172.43. On Monday, it climbed to an intraday high of $194.43, and closed Tuesday at $181.50, down $5.60, after a typical spate of post-earnings profit-taking.