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Google’s stock closes over $800 for first time

Google’s resurgent stock is an implicit endorsement of cofounder Larry Page.

JUSTIN SULLIVAN/GETTY IMAGES/FILE 2012

Google’s resurgent stock is an implicit endorsement of cofounder Larry Page.

SAN FRANCISCO — Google’s stock price topped $800 for the first time Tuesday amid renewed confidence in the company’s ability to reap steadily higher profits from its dominance of Internet search and prominence in the increasingly important mobile device market.

The milestone comes more than five years after Google’s shares first hit $700. Not long after Google broke that barrier, in October 2007, the economy collapsed into the worst recession since World War II and Google’s stock tumbled into a prolonged malaise that eventually led to a change in leadership.

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The resurgent stock is an implicit endorsement of cofounder Larry Page. He replaced his managerial mentor, Eric Schmidt, as chief executive in April 2011. Google’s stock has risen by about 35 percent since Page took over. The Standard & Poor’s 500 index has climbed 15 percent over the same stretch. Most of Google’s gains have occurred in the past seven months.

The significance of crossing the $800 threshold is largely symbolic. If Google had its way, the stock would not even be priced near that level. The company had hoped to split its stock last year in a move that would have at least temporarily halved the trading price by doubling the total number of outstanding shares. But the proposed stock split was put on hold until Google resolves a shareholder lawsuit alleging the stock split would unfairly cede too much power to Page and cofounder Sergey Brin — the company’s largest shareholders since its inception. A trial is scheduled to begin June 17 in Delaware.

There is little dispute among analysts that Google appears well positioned for many years of prosperity. Its Internet search engine remains the hub of the Web’s biggest marketing network; its YouTube video site has established itself as an increasingly attractive advertising vehicle; and its free Android software is running on more than 600 million smartphones and tablet computers, creating even more opportunities to sell ads.

The lower prices attached to mobile ads have raised recurring concerns on Wall Street about the decline in the average rate paid for ads that run alongside Google’s search results. The company, though, is trying to reverse the trend with upcoming changes to its ad system that will prod more marketers to buy mobile ads when they are creating campaigns for desktop and laptop computers.

Opinions about Google weren’t as upbeat a few years ago. Although Google weathered the Great Recession better than most companies, its revenue growth slowed and its stock plummeted to as low as $247.30 near the end of 2008.

Even after the recession ended in 2009, Google’s stock began to lag the rest of the market. Investors began to wonder if the company was losing its competitive edge. But under Page’s leadership, Google has streamlined its decision-making and operations while closing dozens of services. It established its own toehold in social networking with the 2011 introduction of Google Plus.

Google’s stock has never slipped below its August 2004 IPO price of $85. It closed Tuesday at $806.85, up 1.7 percent.

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