Paul Kedrosky’s Infectious Greed: Why YHOO Will Outperform GOOG in 2007 Paul Kedrosky was on CNBC last night and made a case for why Yahoo! will outperform Google as a stock in 2007. Google certainly is the favorite darling between the two companies right now which is why a good contrarian might see the value of Yahoo! as a stock buy vs. Google. Google’s stock price scares me. It’s too high. Hypothetically it would be interesting to see what it would look like at the end of 2007 if you shorted Google stock and bought Yahoo! with the money.
This is definitely not investment advice and despite the fact that I think Yahoo! has some fundamental problems right now in their inability to execute with social search, I do actually agree with Paul and think that at the present time Yahoo! makes a better investment than Google.
Yahoo’s market cap at this point is about $36 billion. This is about 25% of the value of Google’s now staggering $147 billion market cap.
Although Yahoo! has seemed to be spinning their wheels and going nowhere for the past few years, you simply can’t underestimate the value of the mammoth audience that they command. Forget about the smoke and mirrors AJAX vs. Comscore vs. who’s bigger Yahoo! or MySpace stuff. The internet can be trendy and what’s hot today will be cold tomorrow. Despite Yahoo’s recent woes, on a pure valuation basis Yahoo represents far more value than Google does today.