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GOOG Stock Down 8% Today
driller41




msg:3585174
 5:13 pm on Feb 26, 2008 (gmt 0)

I see Google's share price has taken a tumble, down from $750 to $450 today - is this the last of the dotcom crashes?

Afterall they have not created the next big idea and are still selling advertising for a living.

Will they bounce back or will investors now take a more realistic look at their business model?

Who knows perhaps Yahoo may even buy them :)


UBS cut its price target on Google Inc after U.S. paid-search data for January showed Google's sponsored clicks, the basis for its advertising revenue, fell 7 percent sequentially, and shares of the Web search giant tumbled more than 8 percent.

"While Google's search volumes were decent (up 39 percent year-on-year), actual paid clicks were flat...continuing a decidedly negative trend," analyst Benjamin Schachter said in a note.

[reuters.com...]

[edited by: Brett_Tabke at 7:22 pm (utc) on Feb. 26, 2008]
[edit reason] added links to story [/edit]

 

longen




msg:3585185
 5:20 pm on Feb 26, 2008 (gmt 0)

Google Shocker: Paid Click Hits Wall:
[finance.yahoo.com ]

sem4u




msg:3585188
 5:26 pm on Feb 26, 2008 (gmt 0)

That is some drop! Google does still depend on PPC for generating revenue. Of course they are developing/buying new online applications all the time, but as yet they hardly bring in any income.

walkman




msg:3585222
 5:53 pm on Feb 26, 2008 (gmt 0)

yep, economy hit them hard too. Either way, Goog never should have been at $750. It's insane. At $450 and their PE is still 34 while the growth rate has slowed for quite a few quarters [finance.yahoo.com...]

vetofunk




msg:3585287
 6:55 pm on Feb 26, 2008 (gmt 0)

Seems like now would be a good time to buy. Anyone think it's going to tank even further?

zett




msg:3585292
 6:59 pm on Feb 26, 2008 (gmt 0)

(Sorry, but I really really can not hide a bright smile.)

In a few years time we will say that 2008 was the turn of the tide for Google.

By then, a view back in history may probably read like this: "In Spring 2008, the first signs of Google being vulnerable were visible. It began with a weak quarterly report in January, followed by reports of slowing click activity of Adwords, Google's only profitable product. More and more analysts began to downgrade the stock, which lead to the inevitable avalanche of sales orders. Their stock dropped like a rock within few weeks. Today, the stock is trading around $8.50, a mere 10% of its IPO price, and lightyears away from its $750 all time high in 2007."

;-)

Brett_Tabke




msg:3585293
 6:59 pm on Feb 26, 2008 (gmt 0)

Microsoft, Yahoo, IBM, Apple and even Earthlink - all UP today. This aint the economy at work.

> Anyone think it's going to tank even further?

A bit more. Aside from the ComScore report - Sergey "unnerved" stockholders with his recent comments. If Google really did pee their pants over the Yahoo take over attempt, then that is cause for core leadership concern.

marketingmagic




msg:3585305
 7:17 pm on Feb 26, 2008 (gmt 0)

750 to 450 is 40%, not 8%.

Brett_Tabke




msg:3585310
 7:18 pm on Feb 26, 2008 (gmt 0)

8% in the last 24hrs since the report came out.

greenfrog




msg:3585318
 7:26 pm on Feb 26, 2008 (gmt 0)

Zett,

I'm going to make sure I whiten my teeth tonight, because I'll be smiling for days and days.

Google has nothing special other than they are a current FAD. The tide will turn, just like it did for Netscape, Yahoo, AOL....Rome?

Anything tech is toooooo easy to replicate. Google is not engaged in rocket science, far from it. Many of Google's moves at the management level, portray their policies as if they are running in a 100 yard dash. Looking for quick hits of cash any way they can get it. When in reality they are in a marathon, and the people that run companies don't and won't forget how they have suffered at the hand of google. 1 small move after the next, they continue to create anti sentiment towards their company. More and more google is going after the bottom line and loosing site of what made them great.

Maybe soon they'll be a good candidate to be on American Greed.

europeforvisitors




msg:3585360
 7:50 pm on Feb 26, 2008 (gmt 0)

Microsoft, Yahoo, IBM, Apple and even Earthlink - all UP today. This aint the economy at work.

Most of those companies don't derive the bulk of their revenue from consumer advertising.

ADDENDUM: The next post in this thread includes a link to a FINANCIAL TIMES article that states: "Fears that Google could become a victim of a US economy flirting with recession appeared to be the main factor in the share sell-off."

Many of Google's moves at the management level, portray their policies as if they are running in a 100 yard dash. Looking for quick hits of cash any way they can get it. When in reality they are in a marathon

Really? I'd say the opposite is true. They willingly gave up short-term ad revenue when they introduced AdWords quality scores, for example, and again when they reduced the AdSense click area to discourage accidental clicks. Everything I've seen suggests that they're more into long-term strategy than short-term tactics. (This thread [webmasterworld.com] is a good case in point.)
Of course, people who think like day traders may have trouble seeing the bigger picture.

sem4u




msg:3585380
 8:09 pm on Feb 26, 2008 (gmt 0)

Mark Mahaney, Citigroup analyst, said the decline could be caused by Google’s ongoing efforts to improve the lead quality for advertisers and the user experience for searches.

ft.com [ft.com]

Well that could be the case, but going for quality traffic rather than just quantity, is part of what will make Google strong over the longer term. If Yahoo did this years ago, then they may not be in the position they are in today...

[edited by: Brett_Tabke at 9:03 pm (utc) on Feb. 26, 2008]
[edit reason] fixed long link [/edit]

Lord Majestic




msg:3585384
 8:13 pm on Feb 26, 2008 (gmt 0)

Anything tech is toooooo easy to replicate.

Well, if it's so easy why then all of the Google's competitors failed to reach their level of quality despite multi-billion investment? The truth is that it is hard to replicate a black box with so many variables.

joe in nantucket




msg:3585386
 8:16 pm on Feb 26, 2008 (gmt 0)

greenfrog...that's hilarious

Google has nothing special other than they are a current FAD.

How do you explain then that no one has been able to catch them in the search market and no one is close in online advertising? Google is most certainly the technological leader on the internet, it's not like someone can whip up a search engine in a weekend and compete with these guys.

Google is down because of the economy...and they missed in their last quarter so now analysts are unsure how they will perform in the next report...the comScore report on ad clicks going down are only hastening the analysts fears among other things I'm sure. Google should have just shut up about the Yahoo-Microsoft deal because they win no matter what. That deal is doomed from the word go and if they screw it up, Google wins. If it doesn't go through, Google wins. It's only in the most unlikely scenario where the merger goes through and actually works does Google have a bit of uncertainty.

What they need to do is to have a strong first quarter which would reverse the trend. Have the Doubleclick deal go through as fast as possible, work on their other advertising deals (weren't they working in tv, radio and newspaper? yeah, work on that Google). Not to mention that they need to finish their Apps and Docs. Put all the necessary features into that, give people an actual Office suite online and they will make a lot of money off those wanting to leave MS. Not enough as they make on advertising mind you, but still a good amount.

Sadly, Google is the king of search, advertising and not finishing what they start. Their ship isn't turning around, just slowing.

sem4u




msg:3585388
 8:16 pm on Feb 26, 2008 (gmt 0)

I agree Lord Majestic. Google have been on top of the search engine pile for about 8 years now. Yahoo can't get close and Microsoft either for that matter.

greenfrog




msg:3585396
 8:27 pm on Feb 26, 2008 (gmt 0)

I don't believe that Google has more core inteligence than either Microsoft or Yahoo. Especially not as a combined entity.

That would an interesting statistic...How many day traders actually frequent this forum? I personally am way too busy to be a day trader.

The following thread is from this week and in my opinion another dramatic display into how Google's management has shifted since they became public. This thread represents their focus, which is to ensure good stockholder returns at the expense of advertisers.

[webmasterworld.com ]

Tourz




msg:3585398
 8:28 pm on Feb 26, 2008 (gmt 0)

I don't know much about stocks but I had a friend that told me a few years ago that the best money he ever invested was $5K in Microsoft in 1995. He said that the $5K had turned into $150K in 10 years because the stock had been split a few times then gone up again each time. It seems to me that everyone holding initial G stock is bound to profit well over time. A share price that high seems ripe for a split. But maybe I misheard him or my memory is foggy.

johnnie




msg:3585401
 8:36 pm on Feb 26, 2008 (gmt 0)

Hehe, let's hope this punishment makes them realize they need to cater to their advertisers a bit more ;)

Lord Majestic




msg:3585405
 8:41 pm on Feb 26, 2008 (gmt 0)

Hehe, let's hope this punishment makes them realize they need to cater to their advertisers a bit more wink

Or maybe it will lead to them wanting to extract more profit in order to hit those ridiculous estimates by analysts?

sobole




msg:3585410
 8:46 pm on Feb 26, 2008 (gmt 0)

I'm really sorry for this :) :)

venrooy




msg:3585411
 8:46 pm on Feb 26, 2008 (gmt 0)

I guess if you give out enough slaps - you had better expect to be slapped back.

snag




msg:3585412
 8:48 pm on Feb 26, 2008 (gmt 0)

In a year you'll all be kicking yourselves for not buying Goog. Their earnings were 4.43 compared to predicted 4.47...that's not a miss. They grew 50% yoy - can you name another company that did that? What's their PEG? Google's PEG is now way below 1. Let's not forget this report is a guess on US traffic only, which accounts for only half of Google's revenues.
Google's formula is so damn simple. Market share * internet usage (in general terms, ad clicks should be roughly correlatd) * avg cpc = profit. All three things on the left are going up, and will continue to.
Let's not forget that the average net user isn't like it was back in altavista or lycos days, when everyone was a nerd and jumped ship at the drop of a hat. Today's average net user doesn't even know what a browser is, and barely understands that Google means search. Even if a better technology came along (and it hasn't in what, 10 years?), my parents won't be switching any more than they'll be downloading firefox, even though it's 10 times the browser IE is.

ogletree




msg:3585422
 8:56 pm on Feb 26, 2008 (gmt 0)

Google stock has been a black jack game stuck on 21 for a long time. You would have to be a moron to think that you could hit 21 forever. It was never worth that. A stock that costs that much based on nothing has an itchy trigger finger. Google is a new company with a revenue model that is brand new. RISK RISK RISK.

driller41




msg:3585423
 8:56 pm on Feb 26, 2008 (gmt 0)

Quote
"Westerfield said that the paid-click rate slowdown is a negative for Google, but he thinks it "is occurring for internally driven reasons (the cleansing of "accidental clicks" to improve search quality), not owing to ad cycle conditions."

Is this whats happened then - they are reducing their click fraud aka accidental clicks and that has hurt their monthly click targets or have I got it wrong?

[biz.yahoo.com...]

ByronM




msg:3585435
 9:03 pm on Feb 26, 2008 (gmt 0)

I believe investors will continue to cash out of Google and invest elsewhere. Will be interesting to see what happens.

Perhaps a 41b valuation of Yahoo brought Google back down to earth.

greenfrog




msg:3585457
 9:26 pm on Feb 26, 2008 (gmt 0)

I think we've flushed out a few day traders.

MikeNoLastName




msg:3585458
 9:28 pm on Feb 26, 2008 (gmt 0)

" Anyone think it's going to tank even further? "

In the simplist terms, this and the prior two major drops in Jan and the beginning of Feb were all on much higher than average volume, while none of the intervening gains were seen on high volume, so I'd say these are a sign of a continuing downward technical trend for the forseeable future.

chinara




msg:3585478
 9:49 pm on Feb 26, 2008 (gmt 0)

Thats what happens when you don't let advertisers bid on keywords that they want. By raising min bids on to the sky. They deserve to tank another 50%.

just my 2c

Bewenched




msg:3585483
 9:51 pm on Feb 26, 2008 (gmt 0)

Alot of sites aren't doing as much adwords advertising including ourselves. We never had a positive ROI... it was either break even or lose money.

Maybe they should implement a model of pay for performance/sales instead of ppc which is still suffering from fraud.

koan




msg:3585490
 9:55 pm on Feb 26, 2008 (gmt 0)

Maybe they should implement a model of pay for performance/sales instead of ppc which is still suffering from fraud.

Uh, they do. And it's also suffering from fraud, just from the advertisers side. No system is perfect.

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