Why Google’s Stock is So Undervalued

As many of you may know, Google’s stock (GOOG) has recently plummeted. Just 3 months ago in November of 2007, the stock hit an all time high of $747 per share. At the time of writing this article, the stock sits at $518 per share. Quite a difference, considering there hasn’t really been any negative news to fuel this decline. Here are 5 reasons why I am bullish on Google (GOOG).:

1. Google is about to see huge growth in the mobile phone ad market. Android, their cell phone operating system, should begin making its way onto phones within months. This will set the stage for mobile ads that will be targeted by the users location. Google will be at the forefront of this industry.
   
2. Google should perform well even in a recession, and with a weakening dollar. A large portion of Google’s ad sales come from Canada, Europe, Asia and Australia. They are compensated with alternative currencies from the dollar. Even if advertising budgets decline worldwide, Google will not see declines in revenue which are equal to these worldwide declines since many online companies are not affected as much from a recession.
   
3. The decline is due, in part, to no new news. Google had been on a role up until November, with all kinds of great news popping up. We have been in a Google news drought as of late, but expect this to change by the end of this month. Google is constantly working on new technology, and should have some fairly large announcements shortly. Stay tuned.
   
4. Yahoo rejected Microsoft’s $44 billion offer to buy them out. This does two things. It values Google higher since Yahoo basically told the world they feel they are valued at over $44 billion when their market cap was only in the mid $20 billion range before the buyout discussion began. It also makes sure that Google will not be competing against a huge Microsoft run Yahoo.
   
5. Rumors that Yahoo may outsource all their search ads to Google. This would be major news. It would basically be the same as Yahoo, the second largest US search provider, saying “Google you are better then us, lets work together”.

Predicted stock price by Dec 2008 - $825