Tech stocks continue to get creamed this morning, led by Google, whose stock is now officially a dropping knife (i.e., good luck catching it). Shares are down 5 percent so far today to about $353 (at one point they dipped as low as $350. That’s more than a $50 drop since Friday and the lowest the stock has traded since March, 2006. The question on investor’s minds: How low can it go?
Even though Google is the best positioned Internet (or media) company to weather a slowdown in advertising spending, analysts have started cutting back their earnings estimates for the company. As for overall ad spending, Barclays Capital is trimming its estimates for both overall and Internet ad spending. Total ad spending in the U.S. (including cable and broadcast TV, radio, newspapers, magazines, Yellow Pages, direct mail, Internet, and outdoor) it forecasts will decline 3.6 percent this year to $284 billion and then another 5.5 percent in 2009 to $269 billion. Of that total, Barclays is still estimating that Internet ad spending will grow 17 percent to $24.8 billion in 2008. But that represents a $1.4 billion haircut from its previous 2008 estimate of $26.2 billion. (It expects 2009 Internet ad spending to grow another 14 percent to $28.3 billion).
Although search advertising is most likely to hold up in the coming advertising recession, it’s growth rate is expected to slow down. Nevertheless, display advertising is expected to get the worst of it, which means less growth for Google’s DoubleClick business, but should hurt Yahoo, AOL, and Microsoft more. That’s why some analysts are still bullish on Google. In a note today, Barclays Doug Anmuth writes:
- Although we believe that online advertising will continue to benefit from the secular shift in advertising, we are lowering our 2008 online advertising forecast and our projections through 2012 given the current macro-environment, indications that a broader economic recession lie ahead, and the likelihood of sustained disruptions across some of the largest online advertising verticals.
- In this note we highlight five current trends that we believe will shape the online ad environment going forward: 1) pressure on display, as expected; 2) platform launches following 2007’s acquisitions; 3) privacy issues impacting behavioral targeting growth; 4) the shift to performance pricing; and 5) rich media and video continue to outperform.
- Overall we believe Search is the strongest vertical within Internet advertising due to its success based nature and focus on ROI, as such we continue to believe that the biggest beneficiary of growth in online advertising remains Google given its leading position in search and its multiple legs of growth over time including display, video, and mobile.
Despite his optimism, it’s not all good news for Google. Anmuth has search at 55 percent of Internet ad spending this year, Display at 33 percent, lead gen/email at 7 percent, and classifieds at 5 percent. But next year, he has search losing three points of market share to the other sectors. Here is his revised ad spending model (click for a larger image):
It seems like a good buy, but what if the economy tanks further? I’m not spending as much with google as I was before, mainly because I have less money to spend.
A good? Are you an idiot!? goog is overvalued. Look at market cap to revenue ratio and profit potential.
I think there are parallels to the decimation of the e-commerce sector in the dot-com collapse. Amazon’s share price was hit hard, like everyone else’s, but they were best positioned to dominate that market and eventually rebounded extremely strongly.
GOOG’s price will, imho, follow a similar pattern. It will probably continue to fall a bit, be relatively stagnant for 18 months or so, but eventually surge back.
I’m waiting till it drops to 300.
I agree with Daniel. All the decimations seem to be parallel. I guess the only way to go from here is… up? Or still down… hmm. I’ll opt for the first. (Optimistic at its finest)
@Erick: It would be great to have a disclaimer to let us know if you or your familly has stocks you are speaking about.
when mobile search explodes, unless Google dominates this sector their stock will be worth $125 to $199 within 24 months.
Not a chance, they already dominate it, look up gPhone.
what, they dominate b4 they release? dick
The market and economics of the Internet will shift, but shift in fragmented increments. Thus the old model of stand alone none niche portals will have less value, but importance none the less. Legacy sites such as Yahoo will be the brick and mortar of yesterday. Google is not far from that unless they innovate really, really fast.
However their push into the mobile sector may be a preemptive strike.
“It takes a genius to spot a genius”.
Wait for it to start trending up, then Buy. Ebay is another one and so is Dell.
@Colin,
How many day’s trending up do you suggest?
Google’s AdWords has never been recession-tested. No one really knows how GOOG’s operating results will hold up. However, I think Q4 will be more telling that Q3, which just ended.
Sell, sell, sell, like there is no tomorrow.
If, it drops, im going to buy. i wish i bought google stock in the 90s
Last night google adsense site was down for a little, hmmm..
http://gatesand...s.blogspot.com/
Anything to get your crappy blog mentioned. Even a crappy comment.
We ALL wish we bought Google stock in the 90’s BEFORE THEY WENT PUBLIC (you moroon)!
Wow. There is already a link in your name. DO NOT GIVE US A LINK TO YOUR BLOG. Really, we don’t care. At all. If you need to whore it like that, it is obvious trash.
I find it odd that all of your posts got 2 diggs.
This is idiotic. A value investor’s dream. Google is basically printing money over there. Their revenues are enormous and margins are extremely high, and I have total faith in Google continuing to meet or exceed expectations. I’m buying stock very soon, now it’s merely a question of how low I want to let it go.
Dude…Google stock wasn’t public in the 90’s…
Understanding the future will help predict a stock price.
Users find what they want, book mark it or remember the domain name and there will not be a need to use a search engine when they want that same product, or service again.
The paths to finding what people want are being poured in concrete.
“Custom Strategic Niche Location Engines” are the future. The more efficient the internet become the less search engines will be needed.
http://professi...2%3AVideo%3A321
RealityLocator.com- Where Real is the Deal!
Yes, everyone stop creating companies and don’t register anymore domains. Locator dude needs time to add them to his directory. Any of you people born recently? Forget it, just go work at some other company.
Nothing new will be allowed from this point forward, just continue to go to the same place you went before. Do not look to discover anything new. Please visit the best directory since Yahoo circa 1998 at mylocator.com
i love you frank. thanks for warning the others. i appreciate you joining my ministry.
“Innovation of the internet will put the majority of tech people out of work. The internet breeds efficiency. Its inevitable.”
check out this new picture i found.
http://professi...ofile/mylocator
OneLocator.com – Its lonely at the Top.
Stop spamming, Michael why don’t you ban him already and shit list all of his pathetic web properties.
Alek Korzums – Web Fumigation Network
amdwebhost.com
bnbempire.com
imagesocket.com
filesocket.com
theirmind.com
proxysocket.com
newssocket.com
beautifyphp.com
arcadesocket.com
“Pathetic Web Properties” – speak for themselves. they have what i call self propelled dilusion, built in dismay.
LostLocator.com – Finding those who cant find Themselves!
Thank you for linking to my domain names along with your hilarious commentary and witty addition of ‘a word ‘pathetic’, you make no sense.
But I assume for someone who spends his day spamming ‘making sense’ is ranked really, really low when they attempt to think.
haha what a joke.
Seriously..
OMG OMG Erick’s sweetheart is in big trouble…..
Stocks are headed to their 2003 levels. Goog is headed to at least $200. It might take 6-9 months to get there.
Lol, buying google stock in the 90’s. shows the audience of this site.
http://my.barac...om/keatingvideo
Start your graph at 9. Starting the X-axis start at 350 is misleading. It makes the hit look worse that it is relative to historic performance.
Ha. Oh those critics….I meant 0 not 9.
I think what the person meant about the 90’s was that when Google just started out he or she wished they had some shares in Google private or otherwise. Thus the great value now.
i hope the stocks go to maybe 300 or 250 because all this money problems with the U.S. is messed up. I support Mccain but i think he should make tax cuts to us instead of the buisnesses. Thank, you
here’s an idea…..start your own business.
GOOGLE IS BEEASTIN
It might be better to stop investing in stocks until the elections are over. I doubt about Obama but Mc.Cain might improve the position of stock market.
If the Dow has an all time low in 4 years, why can’t Google?? But…I think it will go to 250 or so, just a prediction. Really stinks for those who invested at 700 something.
The Free Hand is regulating the market. Google stock will go back up overtime.
Free Hand? Yeah sure, look at the fundamental, GOOG is propped up by inflated credit market. If people don’t have the liberal credit to spend, they get fckd. Look at the valuation to revenue. Way, way overvalued!
Google is toast, for at least another quarter or two.
They can adjust quality scores and minimum bids until they are blue in the face, but $275 is looking them in the face. They don’t have the Euro to make their revenue look better, they don’t have an acquisition to include the earnings of, and the tax benefit won’t be there either.
People aren’t buying. This means they’re shopping less, so maybe they’re searching more but advertisers can’t spend what they don’t make.
From technical analysis point of view based on 3 years chart, it could go to around $60 eventually.
it will back to 2004 $80
The DOJ thing really spooks me. I think they are really overreaching with the Yahoo deal. Speaking of Yahoo, its down below $15. Thats less than half of what MSFT was going to pay! Where is the outrage?
hahaha.. good point, someone must be laughing up there in Redmond!
Google needs to advertise more on TV, radio and in magazines to attract more internet searchers.
wow, can’t remember a time when so many retards commented on techcrunch…
Firstly – GOOG and ALL internet stock is going to fall until it is valued inline with other market participants. So the days of 50x multiples of earnings are OVER. So to repeat, no more of the “ah – its an internet stock – therefore even though it doesn’t make any money – its still worth more than General Motors”.
Guys, don’t you realize where all the money for the tech valuations has been coming from?? Don’t you relaize its been Hedge Funds pumping money into VCs for the past 5 years??? Now those Hedge Funds are illiquid (read bankrupt), so no more money – no more crazy valuations.
Test Case: see if anyone is dumb enough to buy StumbleUpon for $75 mln.
P.S. Facebook still worth $15 bln? What do you think?
@Arona: So you saying there wasnt “money” in the first place? Hedge Funds was more of a betting both ways right?
Now VC’s all those bet-ters should find something useful to do
stock drops and people started dropping their lives
I don’t think it will come down to $300, so if someone is interested in buying google’s share now. He should do that right away..
Cramer still thinks GOOG is a good long-term buy. What makes you think you know more than Jim Cramer?
A month later and Google around $260. Allows one to better analyze the above comments. As Neils Bohr, the Yogi Berra of physicists, said, “It’s difficult to predict things, especially the future.”
i think it will drop for another month , but as most know stocks are legalized gambling
Bet you guys are mad now if you sold