Subpoena Resistance Hurts Google Stock

imrec writes "Google stock sees a record 8% decline shortly after news concerning the government's request for Google's search logs broke earlier this week." From the article: "'There are potentially concerns that Google could be in the cross-hairs of the Justice Department,' Kessler said. 'Investors are worried about interest rates and inflation and they felt technology stocks like Google, Apple, Yahoo and others were able to withstand these kinds of pressure. But now that ability is in doubt,'"

Comments

Nonsense.

[jcr]

The whole market's taking a hit from the Nikkei scare, and the oil prices. I doubt that most of GOOG's investors even know that there's any issue with the DoJ's unreasonable demands on Google.

-jcr

Google stock down

[StarCharter]

This is just flat wrong! Google's stock got clipped because the whole market went down. Investors are worried because the price of a barrel of oil went above $68 a barrel, the Nikei exchange tanked, and several Big Names reported shortfalls. Target buy prices from wall street analysts rangfe fromn $480 to $560. I wish I had a couple of million to put into this "flawed" stock! I expect to see Google at $500 before the end of 2006.

Don't be retarded

[HangingChad]

From the article: "'There are potentially concerns that Google could be in the cross-hairs of the Justice Department,' Kessler said.

The whole market got slammed yesterday. Google is way out there in terms of valuation and 8% isn't that much considering.

The "Justice" Dept. didn't just go after Google records, they asked all the major search engines. Google just had the nads to stand up and say no.

That's not going to cause their stock to go down, being over-bought causes a sell off, especially when the rest of the market is taking a header. Google could be selling toxic waste and as long as their earnings stayed up the market would still buy their stock. This is nothing more than another example of an over-reaching administration trying to gather statistics to support the conclusion they started with.

I can't wait 'till November.

Re:Google will ultimately have to bow to sharehold

[A beautiful mind]

You mention shareholders, but as far as I know, the majority of Google stock is in the hands of the founders and the employees.

Anyone got data on this in support/against?

Give Me a Break...

[Comatose51]

The link between the subpena[sp?] and the drop in Google's price is pretty weak. A better answer might be the decline in LiveDoor over in Japan because of securities fraud. Major financial organizations don't buy just a few stocks. They tend to buy quite a few and some do so with heavy leveraging. The collapse of LiveDoor probably jeapardize the liquidity of some of those organizations. To stay afloat they sold off a bunch of other stocks, including Google with its previous $400 valuation. If anyone's interested, read "When Genius Failed" to see a similar scenario like this that happened when Russia defaulted.

Combine that with the Nikkei's drop and higher oil prices, you can see why. Let's not forget people's knee jerk reaction. Also, some people got it on Google not because they believe in its financials or ideas but because they see the price go up and think that more people will pile on -- other people like themselves. They planned on selling as soon as the price start on a major move down. So perhaps the LiveDoor collapse triggered the move. Seeing this, they all tried to sell and thus magnified the change. This kind of thing is very common. Read "The Devil Takes the Hindmost" for some good examples. The phrase means that stock speculators all know that an overpriced stock will come down eventually but they all plan on selling out and handing it off to the next idiot and hopefully the last idiot is the devil. I'm not saying Google is pure speculation but I'm sure some of its buyers were speculators who only looked at the price and nothing else.

In any case, there are much better explanations or theories for the drop than just a little subpena. Anaylsts are not all geniuses, especially the ones that speak to the news media. I mean, if I was a genius and knew what's going on, why would I let other people know? You make money trading because you know or think you know more than the other party.

Google is Horribly Overpriced

[geoffrobinson]

So anything could prick a bubble.

Last I checked it was around 400 a share: http://finance.yahoo.com/q?s=goog

And its market capitalization was around 118 billion dollars. That gives them a P/E ratio of around 88 or 89.

To put this in perspective, their market capitalization, which should be around how much money their business is worth, is about 40% of Microsoft's market cap. And Microsoft is a monopoly sitting on $40 billion of cash. Their P/E is in the low 20's.

Don't forget the Dow drop because of GE...

[Svartalf]

GE missed their earnings mark for 4Q- I watched as the Dow and to a lesser extent, NASDAQ, went into a short freefall at the time of the financials statement from GE. Nearly everything got pasted in the market yesterday.

Google said this when they went public!

[dcollins]

Google specifically warned shareholders when they went public that this sort of short-term action was expected in their stock price. And that's why they set up dual-shares such that public shareholders have practically no say over how the company gets run. So if anyone doesn't like it, tough -- go invest in a company that doesn't keep it's word.

From the NY Times:

Wall Street loves Google, but the feeling isn't mutual.

That is the message permeating nearly every page of the public offering statement that Google Inc., the Web search engine company, filed yesterday. In a frank and provocative statement, the company's leaders argued that companies cannot manage for the long term unless investors and analysts have limited say in the way they are run.

In this, they are responding to a widespread belief that investor pressure for predictable short-term earnings growth led many publicly traded companies to engage in accounting gimmickry and business improprieties in the 1990's. Google says that it will not offer quarterly earnings guidance and that it expects shareholders to understand even if it makes unprofitable short-term investments.

"A management team distracted by a series of short-term targets is as pointless as a dieter stepping on a scale every half-hour," Larry Page, one of Google's co-founders, wrote in a "Letter From the Founders." The letter, which appeared at the front of the statement, was signed by Mr. Page and his fellow founder, Sergey Brin.

Many institutional investors may cheer that attitude. But another part of the company's strategy will draw some criticism. Google aims to insulate its executives somewhat from shareholder demands. The company will have dual classes of stock that will give company insiders much more voting power than public investors to elect directors. The company's disdain for the traditional stock offering process is also evident. Instead of selling a small number of shares at a predetermined price, which often stokes demand for the stock when it begins trading, Google will auction its shares to the highest bidders. In that way, the windfall profits from the offering will go to the company and its private shareholders, not to favored customers chosen by Wall Street investment banks. In its registration statement, Google explicitly warns investors not to buy the offering in the hope of making a short-term profit by flipping their shares.

http://www.uazuay.edu.ec/bibliotecas/conectividad/ Google%20Says%20to%20Investors%20Don't%20Think%20o f%20Flipping.htm