Google going below 350

So is going the headline at Barron's this week. Well I don't feel that you will see this next week or even in the coming months. But I see quite a high possibility of that happening in the next 6 months or so. If the economy languishes and Google misses on it's targets, then eventually people are going to stop paying any premium and even start discounting the stock. Well that would put it in that range.

The silver lining is that at that point Google shares would be discounted. Meaning a comeback would be almost inevitable. The only question would be how low can they go? This is a difficult nut to crack. If eps growth slows and is going to remain suppressed for sometime the multiple will shrink as well. And that can push the price targets down. Look at all the banking and real-estate stocks. As the bad news kept coming and hitting the revenues and earnings, analyst kept on reducing price targets. It has started for google now. We are down from 750 something to the 680 something. If they miss that may come down to the low 600s or even may fall to 550ish. But by the time this happens the stock might as well be playing in the mid to low 300 range.

So if you are thinking of investing in Google it would be prudent to wait. Wait not just a few weeks but at least a couple of earnings cycles, before the picture gets a bit clear.

Good luck!

Disclosure: I do own a small google stake.