Filed under: Major movement, Bad news, Google (GOOG), Interviews, Stocks to Sell
News that Google (NSASDAQ: GOOG) has cut off Incredimail (NASDAQ: MAIL) from its AdSense program and that Adsense revenues “made a significant contribution to the company’s results” caused a 37% drop in MAIL stock price. This is just the latest example of why you MUST learn to trust stock charts instead of corporate management. Remember this interview the CEO gave less than one month ago?
When I first saw how rosy a picture the CEO was painting as compared to Incredimail’s incredibly downtrending stock chart, I was inspired to write this article. But with this latest news, I must disagree with my fellow BloggingStocks bloggers from IsraelNewsletter.com, specifically Aaron Katzman’s latest post. Buying this stock here is just as risky as buying 50% off sushi; yes, it might be a bargain, but it could also be very dangerous to your investment health.
After all, there is a definitive reason for this plunge. When a company is dropped by Google, it’s basically an indictment by the Supreme Court of the Internet. To make matters worse, remember that the CEO said, “We can find a way to promote suggested searches and ultimately, as our search traffic increases, negotiate a better deal with Google. We’ve just started optimizing our search revenues.” Wow, now they are so totally busted! And thanks to the that now infamous interview we now know that advertising and search, “… accounts for almost 46% of our revenue,” a figure noticeably absent from today’s press release.
So, a 37% drop in stock price on a 46% drop in revenue and the total annihilation of the company’s future plans seems pretty fair to me. And, their $20 million cash safety net, seems rather nullified by yet another wonderful CEO comment, “Profitability will come. As I said, our focus is on revenue growth.”
What do investors do now? Pray the company works it out with Google or that it finds another search partner like Microsoft (NASDAQ: MSFT), Yahoo! (NASDAQ: YHOO), or even AOL (NYSE: TWX). Pray the reason why it was dropped isn’t due to spamming or click fraud. Pray it has a backup plan instead of ramping up marketing and R&D or else their cash will soon be gone. Pray that some news comes out that bounces the stock and miraculously turns this downtrending chart around. If you catch my drift, this is not an investment anymore, it’s a prayer. Too risky to short or to buy, I’d avoid this stock at all costs and think of it as tuition for your market education.
Disclosure: No Position
Timothy Sykes writes the blog timothysykes.com, is a former hedge fund manager, star of the TV show Wall Street Warriors and author of the book, An American Hedge Fund: How I Made $2 Million as a Stock Operator & Created a Hedge Fund
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A recent report from the British magazine, PlayStation World, dropped a few interesting hints for us to mess around with and speculate and make a sandwich. Sorry in advance — no new images. We usually try to stay away from spoiling story elements, but in the world of FFXIII we’ve come to understand that the rebellion against the Cocoon is led by Lightning, the only character we’ve heard of so far.
After the PSN 
Microsoft’s