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Buy Google at $375 -- Because the Stock Is Headed for an Apple-Like Decline

Stocks in this article: GOOG XOM AAPL MSFT

Again, this is the same scenario Apple experienced when it first surpassed Exxon Mobil two years ago and briefly flirted with a half-billion dollar market cap. The sky was the limit. Analysts began discussing the possibility of Apple becoming the first trillion-dollar company.

It was all downhill from that point. Nothing else made sense. Apple went on to lose more than 40% of its stock value -- nearly half a trillion dollars in market cap. Apple stock eventually bottomed at $385 on April 19, 2013.

A similar decline for Google has already begun. Last week, the company disappointed the Street with yet another earnings miss. Although the report was generally mixed, Google spooked investors with license and other revenue coming in at $1.55 billion, which declined 48% year-over-year. Although net revenue was solid at $12.19 billion (up 22% year-over-year), it still missed estimates by roughly 2%.

When you factor in higher-than-expected operating expenses which led off a 6% miss in earnings per share, Google investors have to ask if the stock's recent decline is based on eroding fundamentals or pure negative momentum.

At this rate, if Google were to continue its decline, these shares may head to a split-adjusted price of $375. As with Apple, this would represent a 40% decline from Google's recent high. It's not a guarantee, but the similarities with Apple are too close to ignore.

After two consecutive quarters of disappointment and a stock that has by most standards already peaked, investors have to wonder to what extent Google's new products -- Google Glass and Google Fiber, the company's 100GB fiber-optic line -- can change current sentiment.

Apple never cared what the market thought. The company was comfortable just growing its cash.

Google doesn't have that luxury.

At the time of publication, the author was long AAPL and held no position in any of the other stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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