However, the explanation of why Google is overvalued doesn't hold water.
... if you were to apply traditional metrics to the company, you'd find that Google's revenue would need to grow 30 percent a year for the next 15 years to justify its current valuation. And the chances of that happening do seem slim, particularly since Google is so dependent on advertising. ...
I actually like traditional metrics, but this analysis fails because it assumes Google's lines of business are static. While an old auto company may have a pretty static business, Google is a relatively young company and the web is evolving fast.
Google revenue is growing now at about 10% a year with essentially one (plus or minus) line of business. The question folks ought to be asking is to what extent the Google management team can leverage their assets to bring new businesses to market, with brand new streams of revenue. If they can, 30% growth is easy (though perhaps not year-over-year for the next 15 years). Investors need to evaluate whether the current team succeeded because they had one really good idea, or because they are good at choosing ideas and executing. If the team isn't up to picking the right next idea, the question of whether their current line of business can support even the current stock price (let alone further growth) is easily answered.