Google, Inc. (NASDAQ: GOOG) continues to be a high-flying stock, closing yesterday at $641.68. While some think Google will reach $1,000 per share in the near future, some aren't sure. With "growing signs that the U.S. economy may be headed for a downturn," can Google keep up its magnificent pace as a growth stock and a company known for ever-growing quarterly revenues?Google's business model could actually be helped by an economic downturn. The company is in a position to weather conditions that would make many industries swoon, and that's by design. By being a virtual company, you can imagine the layers of insulation Google has from nastiness in the economy. No physical inventory, no product cycles, no commodities, etc. Must be nice.
But if advertisers lessen their spending during times of financial crises, Google could get hit. Its network completely relies on advertisers and little else at this time. This is where the difference between graphic and text ads show up -- those Google text ads are displayed while customers are actively engaged (at least, partially) in searching for a product or service.
Though Google's graphic ads are threatening the revenue base of television networks and other types of media, advertisers still want to value for their money. If advertisers start to think Google ads are losing their effectiveness,
the stock is not headed to $1,000 anytime soon.
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Reader Comments (Page 1 of 1)
11-15-2007 @ 12:40PM
Gumby said...
If you want to continue watching Hollywood freaks, cop shows, reality shows and all those garbage TV shows , be my guest! I think the future of viewing lies in our computers not our TVs. I am already sick and tired of those same old reruns and rehashes. I only watch them when I am too tired to man my mouse . Hey, I can go where I want to go on Internet, but I cant on TV and its measly 500 channels. I can only hope that advertisers will think of things better than those crummy flashy ad banners that show birds swallowing worms in 50 states.
11-15-2007 @ 1:37PM
Jjjaaazzzyyy said...
I was wondering the same thing. If Google makes most of it's profits from advertising what will happen if there's an economic downturn? If consumer's stop spending as much won't business stop spending as much on advertising? Plus, I prefer the computer over TV yet I basically ignore all internet ads. I'm too busy researching, chatting, checking mail, blogging, etc. that I don't look at the ads. To be fair, I don't watch TV commercials either, that's what the remote is for(I flip them out of my sight, I can't stand ads or commercials).