Despite the fall in Google's (NASDAQ:GOOG) stock, there is a theory that the company will do well in a recession. Because its Ad Sense text market program draws such a huge number of customers and is so efficient, it may be the last thing companies want to take out of their advertising budgets. Google also has a lot of revenue overseas.
According to Reuters, Google CEO Eric Schmidt said, "We believe that if there were (a U.S. recession), we'll be well positioned. We're not particularly dependent on any particular one market. There's not a lot of advertising for any one market over another." He knows one thing that the markets do not, which is what his revenue actually looks like during that last quarter, even the last week.
If Schmidt is spot on, then Google is probably grossly undervalued and is still growing at the rapid rate that the market is used to. The company's stock is down to $420 from a 52-week high of $747.
It is not likely that the company is sending a false signal. Google is much better off than Wall Street thinks.
Douglas A. McIntyre is an editor at 247wallst.com.
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Reader Comments (Page 1 of 1)
3-18-2008 @ 1:09PM
Kate said...
The problem with google and their click advertising program is that there is no accountability for what they charge. Our company tried using paid ads with google and at the end of the month, they gave us a bill. When we asked for verification of where the ads were clicked, there was none. You were to pay the bill to google on "faith" they were correct in the number a clicks generated and the pricing of those clicks, depending upon ad placement. Who operates a business in that manner? If google could provide us with a total of funds due, they should have been able to provide us with a detail list of where clicks were generated and at what cost. Talk about room for "fudging" on ad costs to customers. Our comment to google? No thank you. We'll take our ad business else where.