Why the Stock Market Shot Up, Part III: Google Giggles
The sudden surge in the stock market that lasted exactly one day had several odd components. The business component news that drove this was Google stocks that shot up $20 in one day. It is the ENRON.
BILL MOYERS (talking about Enron): To understand why CEO pay is so high, you need to look at how CEO's are paid. Not only do they get salaries and bonuses, they get another form of pay called stock options. Simply, a stock option is the right to buy a share of company stock at a low fixed price. For example, let's say that fixed price is ten dollars. Now, let's say the stock goes up in value to $20 a share. Since you can buy it for ten, you make ten dollars profit per share. And if you have been given a million options, that's ten million dollars profit.
There is huge incentive for a company to twist information so things look really good. Google sort of rolled along happily until the young owners decided to go public. /Then there was a great hooplah. Seems no one has learned a thing from previous online crashes. Google was god! So the price of the stocks shot up in value. Now Google is in a fix and to fix this, they did the classic, "Oh, look, due to advertisers flocking to us, our advertising profits shot up 400% in just a few months!"
If you believe this is real, I have a bridge to Brooklyn to sell you.
The company's IPO filing has been rumored for the better part of a year and recent speculation has created a buzz about Internet stocks not seen since online auctioneer eBay went public in September 1998.
Wall Street has been eagerly anticipating a filing from Google so investors could finally get a glimpse into the company's finances.
I would like to peek into their books, too. I suspect when this all crashes in, Elliot Spitzer will take many days to go over the books, too.
My granddaddy told me fifty years ago, "If it is too good to be true it is a cheat".