Thursday night was one of jubilation the homes of many Google Inc (NASDAQ:GOOG) employees. The firm’s earnings came in better than expected and its fundamental performance was incredibly impressive in the three months ended September 30. The company’s stock is now trading at more than $1000 a piece.
Google Inc (NASDAQ:GOOG) is a great company. It has performed brilliantly for years, and it’s expected to continue to do so for years to come. The company is probably going to dominate the internet space, and it’s well protected from competition. That doesn’t mean there are no risks for Google Inc (NASDAQ:GOOG), however. The company is still trading on the open market. If you hold shares there are risks.
There are plenty of risks at Google Inc (NASDAQ:GOOG). Over at Forbes, Robert Hof goes through a couple of the major ones. The company’s profit margins are declining. This is a result of Google diversification. The costs involve in internet advertising are tiny compared to the profits. Google is losing money on Android development, Motorola, and a hundred other projects. Everything is paid for by advertising.
Some of those other projects do contribute to revenue, and some contribute to profit. A swathe of them, including Android, cater to Google Inc (NASDAQ:GOOG) brand and strategic goals. On mobile Google is having problems. Hof names the company’s inability to raise cost per click on mobile as the second problem that might drag on the company.
The company is also witnessing the rise of Facebook Inc (NASDAQ:FB). That firm’s advertisements are nothing on Google Inc (NASDAQ:GOOG) yet, but they might get better in future. Other companies may also be on the verge of getting good at advertising. It’s a lucrative business, and Google has most of it in its hands.
To these three problems Hof adds Motorola’s difficulties, and the mental constraints of a $1000 plus share price. There is little in the Forbes piece, bar competition, that seems like it could hurt Google Inc (NASDAQ:GOOG) in the medium or long term. There are things that could drive share prices anywhere in the short term, however.
Google Inc (NASDAQ:GOOG) is a stable company with great fundamentals. It can be argued that the firm is valued too highly, but that’s probably true of all positive narrative stocks with huge followings. Google Inc (NASDAQ:GOOG) is not going anywhere. That doesn’t mean shares will open at $1000 on Monday, however.