Thursday the 18th of October has been an unusual hard day for the search giant. Shareholders of Google Inc (GOOG) have seen their stares falling over 9 % in one single day after a lower profits than expected and issues with a proposed new tax regulation in France.
How can Google shares slide so much?
Third quarter profits were almost 15 % below analysts’s estimates, indicating that an increasing amount of businesses have a hard time getting ROI on their Adwords investments. Cost per click prices in Google Adwords have gone from average £0.3-0.5 per click a few years ago to £3-5 per click in the beginning of 2012. But it seems they hit the top in click prices around March-May this year, since CPC prices in Google have gone down considerable the last quarters. However, remember that summer months are always low season for advertising and perhaps analyst’s have overestimated the revenue potential during summer.
Still, CPC is rather high and no wonder many businesses without a proper online marketing and conversion strategy fail to make their marketing efforts profitable. Google’s expansion into new businesses might also be chipping away at profitability, says an analyst to Bloomberg news. Our SEO Specialist’s would not be surprised if an increasing amount of people turn to search engine optimisation instead of paid search in the near future. Another reason why Google shares are falling is the surprise by the stock market of the early report, which appears to be sent out of mistake.
The press release, filed with the Securities and Exchange Commission, says “PENDING LARRY QUOTE” at the beginning, referring to Google chief executive Larry Page and suggesting that it was not ready for publication and was released by mistake.
The fact that Larry Page has been ill for quite a while might also be worrying for Google’s shareholders. Hopefully, we hear some comments from him within short.
French media sites want to tax Google
Some of the main French media sites have put pressure on the government to tax Google for content. The French government now considers making Google pay for news content it links to and profits from. Obviously, Google would not accept such as a practice and would therefore consider to not indexing major French newspapers. However, there is still no decision made by the government and I’d be surprised if the law goes through. But you never know with the French laws.. Here is what Bloomberg has to say about the recent slide in Google shares: