The stock value of Alphabet (GOOG, Financial) Company plunged 5% on Thursday due to fear of possible antitrust actions from the DOJ. Of all the proposals under discussion, the most likely to cause controversy is the suggestion to compel the company to spin off its Chrome browser. Nevertheless, the analysts believe the effectiveness of these remedies, arguing that they might not be implemented given the legal challenges that they will encounter when, in appeal, any final ruling may not come before 2026. Nonetheless, due to the growing threat, analysts manage to consider that Alphabet has been underlining with the price target of $220 for their fair value.
Another peg in the DOJ’s proposed remedy is Alphabet’s provision of its search data to competitors, which acts as a dangerous invitation to skew the competitive balance in the search market. Critics warn that such actions could set the wrong tone in creating market structures by putting winners and losers whereby certain entities are locked into data sharing. However, thanks to Alphabet’s stranglehold on the search market, it can generate substantial cash in the future, making it a good stock for long-term investment. While investors are starting to take a cautious approach, this should not be too much of a problem given the proposed measures that are not likely to alter significantly Alphabet’s growth.
This article first appeared on GuruFocus.