Friday, February 29, 2008

Google's shares decrease is a good thing

Google is struggling right now with its stock price. In november, the stock price reached $740 and plunged almost $300 to close on Tuesday 26 2008 at $464.19.
One of the concern of investors is the problems Google encounters to keep its growth pace.

But actually I think this is a great thing that Google's share is decreasing. Not for people that bought the action in December, that is for sure. But Google's stock was highly speculative, basing its price on the ability of Google to expand at a fast rate its shares value. But the market is getting mature now, and the room for growth is smaller than couple of years ago.

Another factor explaining this stabilization is the PPC (price per click) ratio is increasing for companies using Googleads. Because there is more competition now to purchase Adwords, the efficiency of campaigns is decreasing, or I should say the cost per lead is increasing, which is impacting the return on investment and the budget of the campaigns.

The fact that Google's share value lowers is the sign that the speculation will calm down in the next few years. That will allow Google to focus on its business development more than its market share.

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