How low can she go? After a remarkable rise late last year to a near $750-per-share high, GOOG has fallen down, down, down an equally shocking path to a point this month below $450. In fact, the stock dipped to $433.35 by the market's close last Friday afternoon. That's $313.89 off the top. Insane? Insane.
What does this five-month decline from a November pinnacle amount to? Recalibration? It's a little too steep and fast-paced a plunge to consider it a temporary reset. No it hasn't fallen back to where it started. It's still hundreds of dollars away from its "humble" beginnings. But man, what a slide.
I would imagine the drop to be a mixture of things. Partly the company's obvious overvaluation (circa Q3-4 2007). Partly the "unappealing" earnings reports. Partly the general gloom of the American economy. Because, well, US has basically stalled. It is presently moving at barely a crawl, and who the heck wants to invest then numbers aren't budging? Safety first!
Oh, and then there's that whole fear complex everyone has come to enjoy love-hate relations with. It's a violent thing, but fear can make people lose money, or make it. Sometimes a lot of it. Say it with me. H-A-L-L-I-B-U-R-T-O-N. Too bad that today, there are a lot more losers than winners, even in that perpetual goldenland that is Silicon Valley. And when losses are met with more losses, you know what that means. Snowball. Big [bleepin'] snowball.
Do count on GOOG recouping. It'll happen. Guaranteed. A couple hundred in relatively short term gains and and people will be feeling uber-bullish once again.Remember, success in the tech world is equal parts product and buzz. (More or less.) And Google has some pretty nifty product in its pouch. Mountain View isn't done with amazing the press. And the pundits. And, last but not least, the users. Happy trading.
User comment: By: JJTIt's just a slight dip in the road for the mighty GOOG. They'll recover.
User comment: By: Anon GuyYou've apparently never been involved in trading securities professionally.
User comment: By: MBAsterWhile I do think that GOOG as a company is a great investment (depending on the price of course) due to its being a cash-generating machine, its business model is highly susceptible to the ebbs & flows of advertising spending, given that well over 90% of its revenue & income are derived from advertising. They're effectively putting all their eggs in one basket, albeit a highly lucrative basket. The valuations that put GOOG at $700+ per share - ~36x EBITDA - are based on its continued dominance of online advertising, the continued high growth in online advertising, and the multiple for comparable companies in the internet media sector. Like other companies in that sector (e.g. Yahoo before the MSFT bid), it's come down now to trade at ~22x EBITDA. Markets correct themselves over time & I think this is just another example of that...
User comment: By: KlausPeople are still optimistic about the stock market and that indicates GOOG will continue to go down. But the main problem with GOOG, the market has started to lose trust into GOOG`s ability to conquer new (money making) markets. GOOG awaits a painful wave of cost cutting involving the risk of losing key talent. Bottom line: GOOG is a very risky stock and you shouldn't push it here.
Visit here to subscribe to these commentsUser comment: By: Lisa ThurmondHmmmm, let's just hope Google doesn't share the same fate as Yahoo. Yahoo shares took a major hit during the Dot Bust of 2001. Hopefully the upcoming recession and resultant crash in advertising revenues won't hurt Google as much. Google's revenue model is centered on online ads.