Google Below $300

Twelve months ago, Google stock was worth $724 a share. Well, look at it now.

Yesterday, the search giant took another beating, losing 6.6 percent of its value and dropping below $300 a share for the first time since its remarkable ascent three years ago. According to Bloomberg, the plunge was triggered after Citigroup analyst Mark Mahaney predicted a slowdown in the growth of online ad sales, and lowered his Google earnings estimate for the next two years. Although the company's third quarter numbers exceeded Wall Street's expectations, growing profits by 26 percent, the credit crunch and the general decline in advertising budgets have clearly taken their toll on investor confidence. One analyst predicted a $6.7 billion drop off in online ads over the next two years, and since that's the only way Google makes any real money, the company is uniquely exposed in this downturn.

According to ZDNet's Larry Dignan, Mahaney is the third analyst to downgrade his expectations in as many days; Barclay's slashed Google's price targets on Monday, and Goldman Sachs went after Google on Tuesday. Dignan also has more Citigroup details: online advertising for Amazon, eBay, Expedia, and Priceline are all flattening out; and even search ads, Google's bread and butter, are being targeted by worried retailers.

But how is the company really doing? After all, revenue and net income have never stopped growing; it's the rate of growth that has investors jumpy, to say nothing of the general shit-your-pants climate. Silicon Alley Insider's Henry Blodget thinks now's a pretty good time to buy Google. On the other hand, Motley Fool's Sharon Zimmerman is still spooked by how little cash flow the company has relative to its present worth.

Google's always been celebrated as perhaps the most unique company on Earth, the one that practically owns a mint in the Googleplex, that aims to organize the sum total of human information, save the world from itself, and have fun doing it. One critical feature of this myth is the promise that thanks to the genius and low expense of targeted search ads, Google will thrive even in a recession, as its rivals collapse in disarray. The company's spectacular growth was born in the ashes of the last downturn; now, as the country enters what may be its most dangerous economic period in 70 years, we'll see if it lives up to its promise, or is as mortal as the rest of Wall Street.