The New York Post’s Holly Sanders wrote Tuesday that a weekend article in Barron’s about Google’s rich stock price caused it to fall back below $500 per share on Monday.
Sanders said, “The bearish report helped send the shares down 4 percent, or $20.25, to close at $484.75 yesterday. The decline dragged down the Nasdaq and contributed to one of the worst days on Wall Street in months.
“Barron’s said the company trades at 37 times next year’s expected earnings – a price-earnings ratio that it says is two to three times higher than for similar-sized firms.
“Most worrisome, according to Barron’s, is Google’s slowing rate of growth. Analysts predict a 33 percent earnings gain in 2007, compared with an 81 percent profit jump this year.
“On top of that, the price advertisers are willing to pay for search terms has dropped, according to the report. The average price to buy a search word across the Web in the second quarter fell 11 percent, to $1.27, and is down 34 percent from the peak of $1.93 in April 2005.”
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