Know anybody with Google stock, that $750-per-share status symbol that makes the rich richer all over Silicon Valley and beyond? You might be tempted to tease them today, because their Google stock is no longer worth $750 per share. Be prepared for dirty looks or perhaps a punch in the nose, though, because it might be a sore subject to acknowledge how much value Google stock lost over the course of just eight lousy minutes earlier today.
Google's third quarter earnings were somehow released prematurely Thursday afternoon, and Wall Street freaked out that the search engine saw profits dip by 20 percent. This sparked a mad sell-off of Google stock, which experienced its most drastic one-day loss in value ever.
Google stock shares fell by more than 10 percent, or nearly $83 per share, between just 12:30 p.m. ET and 12:38 p.m. ET Thursday afternoon. The stock did have a tiny rebound -- for about three minutes -- in which it regained $9 in lost value. Minutes thereafter, though, the NASDAQ exchange halted trading of the stock, and trading remains halted this afternoon.
Google was scheduled to release their earnings at the end of the business day today, not smack dab in the middle of the day. And those earnings are being seen as quite disappointing.
This Google stock price chart shows you all you need to know about how badly Google stock took an acid bath today. It looks kind of like President Obama's support before and after the first presidential debate, and a classic example of a ninety-degree nosedive.
As per NASDAQ rules, a 10 percent loss in one day generally results in the halting of sales of that stock. Trading is still halted, but can be reinitiated by NASDAQ. You can check the NASDAQ Trader current halts list for real-time information on whether Google stock is trading again.
So why is one of the most valuable stocks on NASDAQ suddenly being treated like a junk penny stock? The main answer is "overreaction," a classic behavior on stock trading floors to any hint of impending bad news. Google is still a fantastically valuable company with a ton of promising new products. Google will not be going bankrupt tomorrow or anything like that.
In a nutshell, the stock dove because the leaked earnings report shows that advertisers placing Google ads paid Google about 15 percent less on average than they did this time last year. The reason is probably the spread of mobile phone web browsing. Google makes a lot of their money by selling online ads. People click on ads less frequently when browsing on their mobile phone, while using mobile browsers more often than ever. This is resulting in fewer clicks on ads, and Google is not the only company confronted with this problem.
Mobile web browsing is forcing online advertisers to figure out how to get people to click on mobile ads more frequently. It's a transition that Google will probably figure out, eventually. They have some awfully bright people working there.
You can have a look at the official leaked Google earnings that weren't supposed to be made public for several more hours. You'll notice that the introduction reads "PENDING LARRY QUOTE," a reference to whatever Google CEO will say to his investors to cover his rear end on that incredibly uncomfortable earnings call later today.