This comes from a rare occurrence – me agreeing with a post at I Hate Google.org. I do not hate Google – and, to be frank, I usually seriously disagree with the author on most points. However, his responses to this anti-Google stock post are quite sensible.
The simple fact is that there is no logical justification for Google’s current stock price. Even after the dive it’s taken in the last several months the valuation seems unnaturally high. The company is priced as if it were in a high-margin industry. However, Google is definitely not high-margin! They earn their income by the penny-per-click model just like anyone running an AdSense based income site.
Both the above articles (otherwise from sites I wouldn’t necessarily recommend), make the big point that "search is in its infancy". This shouldn’t be ignored! New search engines are popping up every month, trying to carve out their niche in vertical search, or playing with their own spiders and algorithms. Who’s to say when one of these new players will suddenly catch the eye of the public and grab a share of the market?
It’s not just new, small players who are striving for a share, as well – Ask.com, with its latest expansions in Europe and highly competitive mapping tool is clearly positioning itself for a move forward in arena of search combat.
I’m not suggesting, necessarily, that you actually dump all your Google stock. However, I wouldn’t expect any huge profits off of it anytime soon. It’s far more likely to continue falling, in my view. I’m far from an expert on stock values – but this position seems like it cannot be held for long.