Will Google (GOOGL) Stock be Hurt by Latest 'Right To Be Forgotten' Regulatory Ruling?

NEW YORK (TheStreet) -- Google (GOOGL) shares are flat at $550.04 in pre-market trading on Friday after a French data protection agency said that the company must follow European "right to be forgotten" laws and scrub its search results of users who have requested that they be invisible on the search engine globally.

The Commission Nationale de L'informatique et des Libertés (CNIL) said that the company has 15 days to comply with the request before it begins levying sanctions against the U.S. search engine company.

Today's announcement follows the European Court of Justice's ruling last year that Europeans had the right to request that search engine results bearing their names be removed from the site if they are out of date, irrelevant or inflammatory.

While other search engines like Microsoft's (MSFT) Bing and Yahoo (YHOO) have acquiesced to the ruling, Google has sidestepped the law by only delisting names from European sites, according to Reuters.

Google maintains that the law should only affect its European sites while regulators say that the rule should be global.

"In accordance with the judgment, the CNIL considers that in order to be effective, delisting must be carried out on all extensions of the search engine and that the service provided by Google search constitutes a single processing," the regulatory agency said, according to Reuters.

Insight from TheStreet Research Team:

Top Stocks analyst Helene Meisler had this to say recently about Google's prospects:

"I am going to do a few follow-ups here on stocks folks have asked about in the last month. We'll begin with Google. I have liked the chart, but it has gone nowhere. At least it is now on the verge of breaking out. If it can get over $560, I suspect those who chase breakouts will like it. The measured target would be back at the hold highs near $580. Keep in mind it has failed here several times already, so you really want to see the breakout," said Meisler.

-Helene Meisler, 'Nasdaq Takes a Deep Breath', 6/03/2015

TheStreet Ratings team rates GOOGLE INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate GOOGLE INC (GOOGL) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, expanding profit margins and good cash flow from operations. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • GOOGL's revenue growth has slightly outpaced the industry average of 5.7%. Since the same quarter one year prior, revenues rose by 11.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Although GOOGL's debt-to-equity ratio of 0.05 is very low, it is currently higher than that of the industry average. Along with this, the company maintains a quick ratio of 5.28, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for GOOGLE INC is rather high; currently it is at 69.99%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 20.77% is above that of the industry average.
  • Net operating cash flow has significantly increased by 50.69% to $6,617.00 million when compared to the same quarter last year. In addition, GOOGLE INC has also modestly surpassed the industry average cash flow growth rate of 41.25%.
  • You can view the full analysis from the report here: GOOGL Ratings Report

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