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Cramer's Bad Call on Google
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There’s nothing Cramer enjoys more than taking a public flogging over a bad stock call. Well, that may be an overstatement but the Mad Money host is always willing to take the heat when he messes up. And he admits that he messed up big time on Google.
See, by staying negative on GOOG [GOOG
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] for too long, Cramer missed the huge move in the stock after it reported that stellar quarter on Apr. 17. There were several reasons why he underestimated the search giant – a stock he had been right on for years.
His biggest mistake was that, like many others, he relied on the infamously unreliable data provided by comScore [SCOR
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], which purported to show that Google’s paid search/sponsored clicks were down 7% in January compared to December, and down fractionally year-over-year. Those numbers were proved wrong when the earnings showed that Google’s aggregate paid clicks were actually increasing.
Cramer also made the mistake of comparing Google to Yahoo [YHOO
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]. It’s absurd to put these two companies side by side under any circumstances, he said. “There’s no comparison.”
In addition, Cramer miscalculated how long it would take Google to monetize its new revenue streams like YouTube. And he didn’t take into consideration the Doubleclick acquisition, which gives Google a chance to diversify away from paid search and into display advertisements.
And finally – and perhaps most inexcusably considering how much Cramer harps on this – he didn’t realize how fast Google is growing internationally. The company now gets more than half of its sales from overseas. It’s the dominant player everywhere but China, where Baidu BIDU still owns the market. The stock has also been unjustifiably hated. If it just trades inline with its long-term growth rate, it would be 17% higher than it is here. But Cramer wouldn’t chase it – especially after the stock spiked on the news that Microsoft [MSFT
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] dropped its bid for Yahoo. Wait for a pullback and then consider buying.
Cramer acknowledged he missed the bottom in Google, and he’ll shoulder the blame in the hopes that you don’t make his same mistakes in the future.
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