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Google Is Curious Loser Ahead of Earnings

Looking over the list of losers in the S&P 500 this year, Google stands out because it is one of — if not "the" — most-loved stocks on Wall Street. Thirty analysts recommend buying the stock, while just four put a "hold" rating (basically the "sell" equivalent) on the shares. Only one analyst recommends selling Google outright.

The shares are down 5 percent heading into Thursday’s report after the bell and are struggling to keep pace with the Nasdaq Composite Index today.

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Once thought to do no wrong, Google needs a new gimmick because its bread and butter search business is under siege, according to investors who have sold the stock, as well as the very few pessimistic analysts that cover the shares.

The search product “is starting to show some age and other formats like Facebook and Microsoft are gaining traction,” said Colin Gillis, the BGC technology analyst, who currently rates Google ‘hold’. “It is very important for the company to continue providing products and services that are more useful and enjoyable by introducing timely innovations. Not doing so could adversely impact the competitiveness of the company and affect its revenues and operating results.”

While China was a small part of its business, Google’s decision to shut down its site for the country spooked some investors in search of more growth from the company this year. Especially after some uneventful rollouts in the last 12 months of its Nexus One phone and Google Wave social network.

“I have many concerns including the decision to leave China, the phone release that wasn’t a blowout and Apple taking some of their turf as a portal to the Internet” said Karen Finerman, President of Metropolitan Capital Advisors and a ‘Fast Money’ trader. She sold her Google position earlier in the year.

Regardless of your long-term view of Google, owning the stock heading into an earnings report has not been a very rewarding experience. Despite beating earnings expectations the last four times after hours, the stock finished the next trading day with a just a small gain or down, according to research by Birinyi Associates.

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