Google Inc (NASDAQ:GOOGL) recently received a downgrade from Stifel Nicolaus & Company from a ‘buy’ rating to ‘hold’ rating. This downgrade has impacted Google Inc (NASDAQ:GOOGL) shares, since they started today approximately 2% down. CNBC’s Jim Cramer and David Faber talked on CNBC about Stifel’s downgrade on Google Inc (NASDAQ:GOOGL) and what does that mean to the company.
Cramer said that Google Inc (NASDAQ:GOOGL) are spending a lot of money. He added that he did not sell all the Google Inc (NASDAQ:GOOGL) shares, since there is a possibility that the shares might go up, if they could monetize YouTube. He added that Google Inc (NASDAQ:GOOGL) is at 17 times earnings and he said that the multiple shrinks when the cash in hand is backed out. But he said that he would not write off Google Inc (NASDAQ:GOOGL), since the company could make money anytime they wanted it. Faber also accepted that a company like Google Inc (NASDAQ:GOOGL) can make money at their will.
“[…] They are spending a lot. I didn’t sell it all because, if they do monetize YouTube, the stock is going to go higher. […] I think that Google is at 17 times earnings and its right, when you back out the cash that multiple is shrinking, but I also don’t want to write them off. Because, if they decide tomorrow, lets just make a lot of money, they can do it,” Cramer said.
Jordan Rohan of Stifel has made the call of downgrading Google Inc (NASDAQ:GOOGL). Faber mentioned that Rohan was previously with Morgan Stanley and is well respected and followed in the street. The reasons mentioned for downgrade include slowing growth in search market, which moves from desktop to mobiles, where monetization is less. Cramer said that Facebook Inc (NASDAQ:FB) is spending a lot, but they are making sensible spending.
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