Google's Slump: Simple Supply and Demand

Simply put, if anyone is looking for a buying opportunity in Google shares, they're getting easier and easier to find. Google's float now stands at 237 million shares, according to data on Yahoo! Finance.

So there's a disconnect emerging between Google's sustained health and its stock performance. And it's likely to continue until the company starts delivering blowout earnings again, or until it joins the buyback club. The former is more likely than the latter, unless shareholders start screaming. If they do, it will be a clear buy signal.

The shift in supply and demand for Google shares may also lead to other complications. The stock becomes a less attractive currency for acquisitions as it grows more diluted, although cash reserves, at $14 billion, remain flush.

Retaining and hiring employees may become a little harder if the stock price continues to drift down. Meanwhile, employees with options priced well below the current price may decide to cash out if they believe the stock will fall further, diluting the float even more.

The good news for Google shareholders is the company in which they've invested their money still has bright prospects and healthy operations. The bad news is the supply of stock is getting to the point where that good news matters less and less.