Google: Nowhere To Go But Up?

Just last month, Google’s (GOOG) stock nearly hit $750/share, or $225B in market cap. Today the stock is down over $100/share. No, that’s not a typo. Yes, a lot of it is due to profit taking as well as the uncertainty surrounding the credit markets, though an analysis of the situation would definitely suggest that Google in particular and online advertising would win over offline advertising as the economy cools.

Either way, what makes this $100+ drop more interesting is that Google’s market share in the red hot search market now stands at nearly 65%. That’s right, almost 2 out of every 3 searches are powered by Google. Look at the search advertising growth in years to come and tell me if Google at $625 is a buy opportunity or not. I don’t know.

To me Google is expensive but indeed, every other correction in share price has turned out to be a buying opportunity. Invariably stock prices don’t continue to climb, but Google - as search king - does not seem to have run out of gas.

Comments

[Tom B]

Ashkan, I'm with you 100% on this one. GOOG has no competitors, and no emerging competitors visible on the horizon. At this point, the only way they can blow it is 1) to fail to spot emerging advertising shifts (a highly theoretical concern) 2) blowing money on doomed projects (OK, they are spending money on this doomed "GPhone" thing-- no worries, they are probably not spending MUCH).

New Growth opportunities: "Open Social" (single API for social networks). BRILLIANT concept. Completely devalues MSFT's reckless investment in Facebook.

[ashkan karbasfrooshan]

Thomas, just playing devil's advocate: I'm not sure for MSFT - a firm with $20B cash on hand and lagging big time in online advertising - investing $240M in Facebook is reckless. They're not an investment group, so they don't really care about the 1.6% stake or $15B paper valuation.

They get in bed with a fast growing social networking site; bear in mind MySpace is in bed with Google... and they ensure that Google won't buy Facebook. Time will tell if the investment was wise, for sure, but reckless, I don't think so...