Google Climbs on Release of Shares
Google Inc. shares rose 3% on Monday as the biggest and final restriction on insider stock sales expired, allowing holders of 176.8 million shares to begin selling for the first time.
The newly tradable stock represents 62% of the Mountain View, Calif.-based company’s 285.9 million outstanding shares. Google, the most popular Internet search engine, rose $5.59 to $192.99 on Nasdaq.
Google shares fell after previous so-called lockups expired, then resumed their climb to a record $216.80 on Feb. 2. Chief Executive Eric Schmidt, co-founders Sergey Brin and Larry Page and other executives agreed to stagger their sales, keeping as many as half the shares released Monday off the market.
The stock rise “shows there’s a strong appetite from investors waiting to buy those shares,” said Martin Pyykkonen, an analyst at Janco Partners Inc. in Greenwood Village, Colo. He rates Google as “market perform,” and says he expects the shares to trade at about $200 each over the next year.
Google shares fell 6.7% on Nov. 16, when 39.1 million shares became available. The stock also declined after a December lockup expired.
An increased supply of Google shares may entice more institutional investors to buy, said Steve Weinstein of Portland, Ore.-based Pacific Crest Securities.
“I don’t think there is enough float out there for institutional investors to really own the stock,” said Weinstein, who rates the shares “sector perform.” “Getting more stock out there will probably lead to a more stable shareholder base.”
Booming sales of advertisements that appear alongside Google’s search results have drawn investors including Legg Mason Inc. to boost their stakes. Legg Mason had 4.48 million shares as of Nov. 30, up from its September total of 4.29 million shares, according to Bloomberg data.
Fidelity Investments, the world’s largest mutual fund company, bought 3.69 million shares of Google from September to December, bringing its total to 8.91 million.
Google said Feb. 1 that fourth-quarter profit jumped sevenfold to $204.1 million, or 71 cents a share, from $27.3 million, or 10 cents, a year earlier. Sales doubled, surpassing $1 billion for the first time.
Schmidt said last week that the company planned to invest 70% of its development budget in Web search and advertising technology.
Services including Gmail and new products for wireless technology will account for the rest of Google’s development spending.
