Earlier this week, Europe's antitrust regulators formally accused Google of abusing its power over online search. So, what does that mean for investors?
According to RBC Capital Markets' Mark Mahaney, Google shareholders should brace for uncertainty and selling pressure on the stock if European Union regulators emerge victorious. A loss for Google could bring out other legal challenges, he said.
"What's unfortunate for Google and maybe for shareholders is that if it's resolved negatively for Google it will probably embolden other cases in which case we could be dealing with a multiyear overhang," Mahaney said.
Mahaney said the uncertainty is whether the charges will cost a few billion dollars in fines or will it require a change to its business practices, which could reduce Google's ability to monetize all of its searches it gets.
"We've got uncertainty. It's going to probably limit the multiple in which the stock could trade," said Mahaney.
Mahaney has a $630 price target and an "outperform" rating on Google.
Disclosure: Mahaney does not own Google shares.