On Friday Google’s stock price dropped a bit over 39 points; a drop which has caused Google’s stock price to drop an incredible 8.945%. This is the biggest drop that Google has seen since going public in 2004. It was less than 2 weeks ago when Google closed at its highest ever, $471.63. What does this mean for Google?
Ever since Yahoo announced their 4th quarter results on January 17th, Google’s stock price has just been going downhill. Even though Yahoo’s quarterly earnings increased by 83% over their 4th quarter earnings last year, Yahoo still failed to meet analyst expectations.
Personally that way that I see it is that Google’s price has been falling since Yahoo’s announcement simply because investors are scared that Google won’t be able to meet analyst expectations. With 8 days to go until Google announces their 4th quarter results, I believe that Google should hit a new all-time high around the time of their quarterly announcement. Whoever is reading this is probably wondering why I would make such a statement and below is my train of thought:
1. Yahoo misses analyst expectations for their 4th quarter earnings.
2. Investors believe that the online advertising market did not meet expectations during the 4th quarter (especially around the holiday season), therefore Yahoo was unable to meet analyst expectations.
3. As a result of the smaller online advertising market in the 4th quarter, Google probably did not make as much as analysts expected them to.
4. Google’s price drops as investors fear that Google did poorly in their 4th quarter.
5. What happened in reality is that Google was able to grab a greater portion of the market share in the online advertising business; therefore Google will meet or beat analyst expectations.
6. Google’s stock price will increase to a new all time high as a result of being able to prove its dominance in the business.
