Google shares capture largest one-day gain

Shares of the search giant jumped as high as 21 percent on Friday, after its earnings report on Thursday blew past analysts' first-quarter estimates.

Update at 1:15 p.m. PDT April 18: Google ends trading day up 20 percent, capturing largest one-day gain

Update at 10 a.m. PDT April 18: Google's gains have now reached 21 percent.

Google's shares closed with a 20 percent gain Friday, marking the largest-ever one-day gain for the Internet giant.

Google's stock closed at $539.41 per share, up $89.87 from the previous day when Google reported after the market's close its first-quarter earnings and blew past analysts' estimates .

Yahoo Finance

During intra-day trading Friday, Google's stock rose as high as $545.11 a share, climbing 21 percent, before edging back a bit.

The last time Google's shares had such a tremendous rocket ride was on October 22, 2004, when it jumped 15 percent in one day, according to analysts. The company's stock that day soared to $172.43 a share, up from $149.38 the previous day.

Driving that October jump was Google's first earnings report as a public company. Newly minted public companies are always especially concerned about their first earnings report because missing revenue and earnings numbers can put a company in the penalty box with investors for a very long time.

Investors had been concerned that Google would post weak results Thursday, given the doom-and-gloom forecasts from research companies that monitor paid-clicks and traffic.

ComScore, prior to Google's earnings release, put out figures that Google's paid-click growth in the U.S. grew a paltry 1.8 percent in the first quarter, compared with the same period last year. That gave investors a scare, as they feared Google's growth was slowing.

Google, however, actually posted a 10 percent increase in paid-click growth in the U.S., and a 20 percent jump worldwide, in the first quarter, according to Sandeep Aggarwal, an analyst with Collins Stewart.

ComScore's share price took an 8 percent hit in after-hours trading after Google reported its first quarter results, according to a report in The Wall Street Journal. By morning trading on Friday, though, its stock regained most of its ground.

The folks at ComScore explained the discrepencies in a blog posting, noting they only count U.S. paid search clicks, while Google's figures include not only international figures but also "affiliate site ads."

Analysts, meanwhile, were busy this morning, pumping out their revised Google estimates.

Mark Mahaney, an analyst with Citigroup Global Markets, for example, upped Google's 2008 revenue estimates to nearly $16 billion, up from $15.6 billion. He also bumped up his earnings estimate to $16.80 per share, up from $16.17 a share.

Clayton Moran, an analyst with the Stanford Group, increased his earnings per share to $20.63 for 2008, up from his previous forecast of $19.50.

Despite Google's better-than-expected performance and Wall Street's increased estimates, analysts still issued words of caution.

"We continue to remain concerned at the rate of deceleration in paid clicks," Mahaney said in his research note. "(But) on the other hand, cost-per-click growth remained strong."

Moran also expressed concern over Google's growth rate.

"While last night's report provided relief that trends had not materially worsened, growth is slowing and margins are pressured," Moran said in his research note. "As such, we maintain a somewhat cautious view and a 'hold' rating."

Google's year-over-year growth in paid clicks rose 20 percent worldwide in the first quarter, but fell short of its 30 percent growth in the fourth quarter.

 

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