Market Doesn’t Click With Google Ad Woes
A flat year-over-year February in paid clicks contributed to investor and analyst concerns about Google and today’s declines.
At press time, shares of Google were off nearly 3 percent from their opening price. A paid click report issued by comScore and distributed to analysts gave investors cause for concern that the ad market online could be slowing.
The free-wheeling growth that pushed Google well over $700 per share simply has not existed in 2008. Analysts cited by Bloomberg blamed the current economic conditions and Google’s expulsion of poorly performing ads from its network.
“February data from ComScore suggests that Google’s paid click volumes in the U.S. aren’t getting meaningfully better,” UBS’s Benjamin Schachter said in the report. He also noted comScore numbers, naturally, don’t “correlate accurately” with UBS estimates on Google’s sales.
Over at Reuters, Lehman Brothers analyst Douglas Anmuth dropped the firm’s target for Google shares to $580. They also lowered estimates for Google’s first quarter and full year earnings due to economic concerns.
Google has enjoyed the ride their one-trick pony, contextual search, delivered over the past couple of years. While no one is predicting Yahoo, Microsoft, or Microsoft/Yahoo will dethrone that business, investors feel the natural jitters when their investment’s major revenue stream shows weakness.