Google Moves From A Stock Of Hope To A Stock Of Doubt

Google’s (GOOG) stock is having a really rocky time.  On January 31, the stock hit $505. Today, it dropped below $470. A drop of 7% in such a short time is worth a look. The shares can’t seem to find a floor.

Over the weekend, Time Magazine ran a piece about what Yahoo! (YHOO) would have to do to turn itself around. It covered Panama taking share from Google and a lot of other news magazine junk. But, why anyone would use Panama over Google’s product unless it is substantially better is really hard to say.

Google’s earnings weren’t good enough for a lot of investors. There is fear that as the company’s growth inevitably slows and it invests in new products that margins will drop. Fair, and probably true.

And, then there is the news that Viacom wants about 100,000 videos containing its content taken down from Google property YouTube. The YouTube buy will look expensive if the fight with big content holders goes on. But, the other side of that argument is that the YouTube audience is too large to be ignored at an outlet and that content owners will eventually come back with distribution deals.

The real problem for Google is that it has gone from being a stock of hope to a stock of doubt. That has happened to other big stocks over the years. Certainly Microsoft (MSFT) and Yahoo! qualify. In the collective minds of investors Google has more going against it than for it, at least for now. Being the leader in search is giving way to concerns about competition and whether its efforts outside its core competence will ever an pay off.

The floor under that stock may keep falling.

Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.