Bookmakers Cautious Over Google Hype

City bookmakers have been forced to cut the price on Google's shares reaching $600 by the end of the year despite a leading US analyst predicting the price could top $2000.

Cantor Index saw sustained support for the $600 price tag at odds of 6/1 and has cut the price to 9/2, even though the bookmaker's stock market guru David Buik said he felt much of the share price's soaring value was down to hype. The company launched the bet at the start of the year.

Caris & Co, a US stockbroker, made the $2,000 forecast last week, suggesting the company's market value could overtake General Electric to become the world's most valuable company if the launch of digital services take off.

On Saturday ITN announced it was partnering with Google for the planned launch of Video Store, which will enable consumers to buy and rent videos over the internet.

Google shares closed on Friday at a record $465, but sceptics believe that the stock is being hyped by the same sort of irrational exuberance that characterised the dot-com bubble of the late 1990s.

Mr Buik said of Google: "A lot of it is down to hype and bluster," he said. "But there is no question that this stock is under a wet sail. It is simply a phenomenon and Sergei Brin and Larry Page (Google's founders) are amazing." However, he said traders have been highly reluctant to take a long-term interest in the stock for fear of a sharp crash, with some bets on price gains lasting a few seconds.

On Thursday one trader bought the spread on Google for £1 a point, and closed his bet just 19 seconds later to net a £56 profit. "This is our most popular US stock, but people take a very short-term view on it, trading in and out within seconds," said Mr Buik.