Thursday, August 18, 2016 10:59:15 AM
http://americasmarkets.usatoday.com/2015/06/03/googles-stock-is-dead-money-heres-why/
Google stock has been dead money for a year – a source of frustration for investors who have taken a flyer on this risky stock. With the shareholder meeting raging, the question is, what’s wrong with The Goog?
Shares of the online advertising company are down 0.1% over the past year – a performance that’s even worse than it sounds given the that Standard & Poor’s 500 is up 9.6% over the same time period. That’s hardly the kind of performance investors thought they’d signed up for when Google (GOOGL) was being ballyhooed as the company that would come to dominate tech.
Chart source: S&P Capital IQ
Chart source: S&P Capital IQ
How could the company which has a near monopoly in desktop search and a huge player in mobile operating systems be underperforming by such a wide margin? “Google has to redo everything, and they have to do it fast,” says Trip Chowdhry, analyst at Global Equities Research. Shares are up 48 cents, or 0.09%, to $554.63 Wednesday.
America’s Markets asked several analysts why this stock – which many assumed would be rocking right now – is lagging:
* Mobile pennies are replacing desktop dollars. Consumers think Google is a technology company. But it’s an advertising company. More than 90% of Google’s revenue comes from ads. That means Google is facing the same pressures dogging most online ad-based companies – consumers’ move to mobile devices is eating away at profits of more lucrative offerings, such as desktop search.
“The critical issue that I think is in the back of everyone’s mind is will Google be able to monetize mobile ads as it did for the desktop,” Bonner says. “While the mobile platform is exploding and desktop declining, getting ads to work on the small screen and comparable pricing are a steep challenge. The jury still seems to be out on the mobile question which leads to uncertainty.”
* Flurry of competition for online ad dollars. Back in 2006 – people looking to advertise online only had three main options: Google, Yahoo (YHOO) and Microsoft (MSFT), Chowdhry says. Google built its business stripping away ad dollars from traditional media, he says.
Today – Google is the ad company on the defensive. There are thousands of options including many that are much more focused like Facebook (FB). And they’re all gunning for Google’s customers. “Google needs to understand it’s 2015, not 2006,” Chowdhry says. “They’re being challenged, they’re not the challenger.”
Making things worse – since Google’s ad rates are based on an auction model. That means as the supply of online ads blossom, the prices take a hit, Chowdhry says. “Google was the destination for digital ad spending. Now its just another property,” he says.
* Google I/O was “underwhelming.” Google stock bulls hoped the company’s developer conference last week would reignite excitement about the company’s various offerings. But while the company featured some new features, it was “underwhelming,” says Joe Bonner analyst at Argus Research.
* Google’s profit growth rate is collapsing – causing valuations to compress. The company’s diluted earnings per share before extraordinary items is up an anemic 1.9% over the past 12 months. Google investors probably didn’t think the company could grow that slow. That’s the slowest rate of growth since the financial crisis hit in 2008 and down from 29% in 2010.
Recent GOOG News
- MongoDB and Google Cloud Collaborate to Optimize Gemini Code Assist for Developers Building Applications on MongoDB • PR Newswire (US) • 05/02/2024 10:00:00 AM
- Google Terminates Employees Over Protests Against Israeli Government Contract • IH Market News • 04/18/2024 12:20:50 PM
- Apple in Talks with Google to Integrate Gemini AI into iPhone, Shaping a New Era in Tech Collaboration • IH Market News • 03/19/2024 10:39:54 AM
- Futures Pointing To Continued Weakness On Wall Street • IH Market News • 03/05/2024 02:03:27 PM
- U.S. Stocks May Lack Direction Following Yesterday’s Modest Pullback • IH Market News • 02/27/2024 02:14:46 PM
- FTC to Inquire to Microsoft's, Google's, Amazon's AI Partnerships • Dow Jones News • 01/25/2024 06:12:00 PM
- Lüm Mobile Taps Alepo's TelcoBot.ai for Generative AI Customer Service • PR Newswire (US) • 01/25/2024 04:00:00 PM
- Alphabet on Track for Record High Close -- Data Talk • Dow Jones News • 01/25/2024 03:45:00 PM
- Google to Settle Chip Patent Lawsuit With Singular Computing • Dow Jones News • 01/24/2024 07:15:00 PM
- Alphabet Division X Cutting Dozens of Staff, Bloomberg Reports • Dow Jones News • 01/22/2024 04:32:00 PM
- Alphabet on Track for Highest Close Since February 2022 -- Data Talk • Dow Jones News • 01/22/2024 03:36:00 PM
- AST SpaceMobile Gets Investments From AT&T, Google • Dow Jones News • 01/18/2024 10:00:00 PM
- Google to Invest $1 Billion to Build UK Data Center • Dow Jones News • 01/18/2024 06:51:00 PM
- Applied Materials, Google to Collaborate on AR Technology • Dow Jones News • 01/09/2024 01:12:00 PM
- Alphabet on Track for Highest Close Since April 2022 -- Data Talk • Dow Jones News • 12/20/2023 03:49:00 PM
- Trending: Alphabet to Pay $700 Million in Google Play Settlement • Dow Jones News • 12/19/2023 08:13:00 PM
- Trending: Epic Games Wins Antitrust Lawsuit Against Google • Dow Jones News • 12/12/2023 03:50:00 PM
- Alphabet on Pace for Largest Percent Increase Since July -- Data Talk • Dow Jones News • 12/07/2023 03:22:00 PM
- Google, Canada Reach Deal Over Planned Online News Law • Dow Jones News • 11/29/2023 08:05:00 PM
- Google, Canadian Government Reach Deal on Online News Act, CBC Reports • Dow Jones News • 11/29/2023 05:23:00 PM
- VMware and Google Cloud announce planned PostgreSQL-compatible Database Solution for traditional and generative AI applications on VMware Cloud Foundation • Business Wire • 11/07/2023 08:05:00 AM
- Match Group, Google Reach Binding Term Sheet in Legal Battle • Dow Jones News • 10/31/2023 09:29:00 PM
- Alphabet Ends Down 9.5%, Sees Largest Percent Decrease Since March 2020 -- Data Talk Update • Dow Jones News • 10/25/2023 08:59:00 PM
- Alphabet Down Over 8%, on Pace for Largest Percent Decrease in Almost a Year -- Data Talk • Dow Jones News • 10/25/2023 02:48:00 PM
- Stocks to Watch: Microsoft, Alphabet, Stride • Dow Jones News • 10/25/2023 12:16:00 AM
VHAI - Vocodia Partners with Leading Political Super PACs to Revolutionize Fundraising Efforts • VHAI • Sep 19, 2024 11:48 AM
Dear Cashmere Group Holding Co. AKA Swifty Global Signs Binding Letter of Intent to be Acquired by Signing Day Sports • DRCR • Sep 19, 2024 10:26 AM
HealthLynked Launches Virtual Urgent Care Through Partnership with Lyric Health. • HLYK • Sep 19, 2024 8:00 AM
Element79 Gold Corp. Appoints Kevin Arias as Advisor to the Board of Directors, Strengthening Strategic Leadership • ELMGF • Sep 18, 2024 10:29 AM
Mawson Finland Limited Further Expands the Known Mineralized Zones at Rajapalot: Palokas step-out drills 7 metres @ 9.1 g/t gold & 706 ppm cobalt • MFL • Sep 17, 2024 9:02 AM
PickleJar Announces Integration With OptCulture to Deliver Holistic Fan Experiences at Venue Point of Sale • PKLE • Sep 17, 2024 8:00 AM