Google shares recuperates slightly
February 28, 2008
On the 27th of February the Google shares were able to recover a bit after almost three days of massive selling. The company was able to do so as a result of the support of some analysts in the internet field. Some days back a report had come out saying that the ‘Pay-per-click’ advertising sector of the company is slowing down a bit. However the analysts of the field came to the rescue of the company to suggest that nothing of that sort is happening.
Throughout the year the Google shares has been on quite a slide. After starting the current year at a stock value near the $700 mark it has been falling steadily. By now it has lost almost one by third of that value. The slide was a bit too much in the last few days as it came down by almost 8 percent in the last couple of days. The main reason for this sudden drop was the report that comScore let out, which said that the growth of paid clicks that was happening in the Google supported site was declining. The growth rate is calculated by the number of times a Web user will click on an advertisement supported link.
Since most of the websites make a heavy chunk of revenue in this fashion, the news came out as a blow to the company. Just like any other Google also got a large amount of its revenue from these ‘paid clicks’. As the report came out saying that these clicks were reducing it led to worries amongst the investors that the company would be a victim of the economic slowdown if the consumers decided to put a check on their spending.
Many analysts came in defense of the internet giant as the report came out. Many of them admitted that the escalation of the company’s paid search had to slow down over a period of time. But they made it very clear that the company will not be affected by the present macroeconomic conditions that exist in the society now. Many believe that such things will in the least way affect the paid clicks of the company.
As an explanation to the report the company executives said that this was only a short term phenomenon that was happening and as a result of improved technology Google has implemented to make sure that accidental clicks by the users were kept to a minimum. This they believe would result in reduced revenues for a short period of time. This was the explanation the company used to justify the drop in the number of paid clicks as it came out with its fourth quarter earning report.
The shares of the Google based in Mountain View, California rose by $8.67 which is almost 1.9 percent to finish on the 27th at $472.86. This was the first time in three days that the shares increased. The stocks however are still at a very low level as compared to where it was one year back.
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