“Seeing Google With the Eyes of Forrest Gump”
By GARY RIVLIN
Published: August 10, 2004
Wall Street has always had child prodigies that arrive rich with promise, dating as far back as R.C.A. in 1920 and peaking in the last decade, when a long list of technology-related companies went public despite their youth. The current case, of course, is Google, the popular Internet search company, which has been expected to go public soon, although various complications seem to be making the timing increasingly uncertain. The company said in a filing with the Securities and Exchange Commission last month that it expected its shares to sell for $108 to $135 each, which would make it the most expensive initial public offering ever per share.
“The problem Apple faced, and the problem a lot of these companies that start off with all this promise face, is because they’ve gotten all this attention, they have a very high price from the start,” Professor Loughran said. “In the case of Apple, the market pegged it as a company that would have to hit at least a couple of big home runs just to justify its original offering price.”
It is as if investors are invited to buy into the future salary potential of a child prodigy - paying a share price that assumes the prodigy will be making $200,000 a year by age 30.