Shares of Google GOOG +0.01% lost about 8% after the Internet giant missed earnings. Google is a cheap stock; the big drop cannot be justified by missing earnings alone.
The three real reasons behind the big drop in Google’s stock price are Amazon AMZN -0.04% , Apple l AAPL +0.06% , and Facebook.
On Nov 3, 2011, I wrote on MarketWatch that “holders of Google stock are well advised to lighten up on bounces…”
I did not have a crystal ball to predict a decline in Google’s stock price; it is simply that the attack on Google’s basic business model was so easy to see.
Ecosystems built by Amazon, Apple, and Facebook are the reasons behind the big decline in cost-per-click (CPC) data. The average cost paid by advertisers per click to Google was expected by analysts to increase 3.2%. It turns out the CPC decreased by 8% both from the previous year’s fourth quarter and from the previous quarter.
The problem facing Google is that its bread and butter is still a basic search.
Amazon has developed its own ecosystem complete with information from its competitors. It used to be that most consumers would start their search for online purchases at Google. Now since consumers know that they can see information from Amazon’s competition on Amazon, the research at The Arora Report shows that consumers are increasingly bypassing Google and going directly to Amazon.
Facebook has been working hard to keep consumers within its own ecosystem. Our research shows that an increasing number of Facebook users are making less use of Google…Read more on MarketWatch
