Google shares drop below $300 for first time in three years
Google shares fell below $300 for the first time in over three years on Wednesday after a Citigroup analyst warned online advertising growth will slow.
Stock in the world's most widely used Internet search company slumped 6.6 percent, or US$20.46, to end trading on the Nasdaq Stock Market at $291.00 on Wednesday.
Prior to Wednesday's session, Google hadn't dipped below $300 since Oct. 17, 2005, when the stock fell to $294.56 in intraday trading.
The decline comes amid a global financial crisis that has slashed trillions of dollars of value off global stocks. Concerns in the technology sector have heightened as companies revise down sales and earnings expectations.
On Wednesday, for example, chip powerhouse Intel reduced its fourth quarter sales forecast by more than $1 billion, blaming "significantly" weaker-than-expected demand globally for its chip products, which power about 80 percent of the world's PCs.
Citigroup analyst Mark Mahaney lowered earnings estimates for Google in the fourth quarter of this year, as well as 2009 and 2010. He reduced his target price on the stock slightly to $450 but maintained a 'buy' rating.
Investors have reason to be wary of analyst reports on Google.
Just over a year ago, most analysts were Google bulls. The company's stock hit a high of $747.24 on Nov. 7 of last year, up by nearly a third in a month, as investment analysts poured out glowing reports with rapidly increasing price targets for the stock.
Merrill Lynch in early October 2007 upgraded its share price target on Google to $740 from $590, while shortly afterwards, American Technology Research put out a report predicting Google shares could hit $815. Credit Suisse topped all others with a 12-month target price of $900 on Google stock, though three other firms had targets of $850.
Over the long term, most analysts expect Google shares to do well due to the company's hefty market share in Internet search as well as the ongoing trend to advertise on the Internet.
IDG News Service
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