Google Will Bounce From Here

Google (GOOG) is down big again today on data from comScore saying that paid click growth in January was flat compared to last year. 

The selloff is way overdone at this point and the stock will bounce.  Consider:

  • At its low point today of $447, Google was down 40% from its closing high of $742 on November 6 – only 3 1/2 months ago!
  • Google is about 20% below its 200 day moving average (around $575).
  • Google is now trading for 26 times last year’s earnings (excluding cash and short term investments on its balance sheet) in which it grew revenues by 60% and net income by 50%.
  • Volume is heavy today.  This looks like the last of the people who can’t take the pain anymore getting out.

Disclosure: Top Gun is long Google (GOOG) shares and calls.

UPDATE (Wed 2/27, 10:40am PST): Google has now bounced 6% in the last 8 1/2 trading hours – from an intraday low around $447 yesterday around 11am EST up to $474 now (1:30pm EST) (GOOG 2 Day Chart).

That’s the bounce.  I’m not being greedy.

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