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Google's stock price dives on Internet ad-slump fears

Google's stock price dives on Internet ad-slump fears

Google's stock price sank Tuesday in the wake of a report hinting that boom times may be over for the Internet darling's money-making online advertising.
The number of click ads in January was essentially the same as it was in the same month a year earlier, and dipped seven percent from December, a month known for major holiday shopping, according to industry-tracker comScore.
Google's stock price dipped below US$448 per share on Tuesday but was US$462.55 in after-hours trading at 2300 GMT, representing a five percent drop for the day.
Investors evidently fear the comScore figures signal an end to Google's years of exponential revenue growth.
"The difficulty is that Google is being measured by high growth year over year that has been holding the stock price up," said analyst Rob Enderle of Enderle Group in Silicon Valley.
"Any reduction in growth rate is going to have a catastrophic effect. When the market is already nervous about going into a recession the combination will cause the stock to trade down."
Consistently strong earnings and its crown as king of Internet search drove the price to nearly US$750 per share in October of last year.
Google's quarterly profits have topped US$1 billion, with most of the money coming from Internet ads that advertisers only pay for if clicked on to activate online links.
However, Google has been confronted with concerns about "click fraud," bogus clicking on Internet ads by competitors or crooks.
Google has explained while discussing earnings in recent quarters that it is taking steps to reduce click fraud, and to improve relevance and reduce numbers of ads displayed on search pages.


Updated : 2021-03-05 10:09 GMT+08:00