Wall Street was going nuts against Google Tuesday, with nearly 7% of the stock price dropping due to the CFO's remarks that growth was slowing down. These remarks came from an offbeat speech -- it was not meant for any stock guidance.
Everyone knew that the product cycle of "click revenue" will plateu at some point -- the price per click will get more expensive as more companies participate, and there will come a point where cost effectiveness will be an issue; however, underneath the CFO's speech was groundbreaking news.
They will pursue other products to balance the slow growth of click revenue. Google's research and development accounts for 20% of their focus, while 80% is on their search engine strengths. With that 20% came Google Earth, Google Local, Google Base, and other technologies that are far from maturity. In fact, Google Base could become the second largest payment processor on the Internet within 3 years next to PayPal.
The main complaint against PayPal is their fees and policies; however, most people stay with PayPal because the brand name is recognizable. With the up and coming Google Base, the brand name already exist and could possibly overtake PayPal down the road.
Always Find Good News in Rough Waters
Many investors seem to have concentrated on the problem that click revenue was slowing down; hence, they sold their shares. They totally missed the solution of the problem: looking for other revenue streams. Google Base is a part of that solution. If Google develops it properly, they could invite an exodus of online merchants away from PayPal, which the online merchant community (eBay PowerSellers and others) considers as expensive.
The Price I Bought At...
I bought Google shares at $364, the price average is currently at $379. Roughly a 4% increase in less than 24 hours.