The stock has dropped below $520 — nearly 20% off its peak in January, when the company announced that Eric Schmidt would be stepping down and co-founder Larry Page would take the reins.
The bears worry that Google (GOOG, Fortune 500) has had trouble breaking into lucrative new markets like social media. The company still gets most of its revenue from ads stemming from its search engine and company-owned sites like YouTube.
But the bulls argue that Google’s core business is still so big because that revenue keeps growing so fast — 32% in the first quarter vs. the same period a year ago.
The company stumbled with Google Checkout, a competitor to PayPal. And it was late to the game with Google Offers, which is trying to take on Groupon.
But the firm is gaining traction in mobile search, says Ken Allen, manager of T. Rowe Price’s Science & Technology Fund, which owns the stock.
Traffic from mobile devices is rising because the Android operating system is thriving — more than 350,000 Android smartphones are activated every day.
A big question for Google investors is whether the new CEO is up to the job. Earnings season was supposed to be Page’s introduction to Wall Street — and it was widely viewed as a disaster.
Google’s expenses shot up in the quarter thanks to raises, new hires, and a costly marketing campaign for its Chrome web browser.