Google: The Bear Case
No one else is writing this piece, so it will have to be me. I should say upfront that I'm not predicting that this will happen (yet), and I'm certainly not making a recommendation. I'm just laying out a scenario that could kick Google in the kneecaps and take its stock back to, say, $100 a share.
Context & Ripple Effects
Henry Blodget frames the piece explicitly as a scenario rather than a call: no recommendation, no prediction, just a sketch of what could knock the stock back toward $100. The timing is deliberate — it lands after a run of launches meant to prove Google is more than search, including the acquisition speculation Motley Fool was chasing in November 2005.
What gives the bear case its hook is the reception of those launches: critics judge the new Google Video Marketplace — which bundles user-submitted clips with licensed content from CBS and the NBA — as underwhelming next to AdSense, Gmail, and Maps, while quieter experiments such as classified-style ads in the Chicago Sun-Times and a Mac version of Google Earth show the company probing beyond its core.
First-order effects
- Investors are handed a concrete downside framework — a path to $100 a share — against a stock whose bull case had been running largely unchallenged.
- CBS and the NBA have attached their brands to Google Video Store, so a lukewarm launch lands on their content-distribution bets too, not just Google's.
Second-order effects
- If the bear case sticks, the burden shifts onto each successive non-search product — Video, print ads, downloads — to show standalone monetization, since the argument is precisely that none yet matches the core ad machine.
- Content owners weighing deals with Google now price in the risk that paid-download economics underperform, strengthening the hand of whoever can offer them proven ad-scale distribution instead.
Third-order effects
- The deeper issue Blodget names is revenue concentration: a company valued on diversification narratives but earning almost everything from one ad product, where any stumble in that single engine reprices the whole equity.
- If the pattern holds, analyst work on Google splits into dueling scenario pieces — bull and bear — making the stock's story less about quarterly beats and more about how many real second acts a search monopoly needs before investors believe in one.
The trend: The Google debate is pivoting from a pure growth narrative to a concentration-risk argument, in which every non-search launch is scored against whether the company can build a genuine second act.