Google $200 or Google $400?

What do professional bowlers and Google (NASDAQ:GOOG) have in common? As of last night's close, they would both love to be at 300.

Shares of the search engine giant closed below the $300 mark yesterday. Sure, Google has been here before. It was here just two months ago. Sadly, it was also here in the summer of 2005, just 10 months after going public. However, if the financial media was quick to cover Google's round milestones on the way up, it only makes sense to revisit those same markers on the way down.

Some may argue that it's just karma biting Google's tail. The company recently infuriated many investors by repricing its employee stock options. This also comes at a time when there are renewed rumblings of Microsoft (NASDAQ:MSFT) standing on Yahoo!'s (NASDAQ:YHOO) shoulders to make a more potent enemy for Google to vanquish.

Mr. Market isn't a grudge-bearing monster, though. It simply responds to fundamentals and the simple laws of supply and demand. Investors, quite frankly, fear that Google isn't immune to an advertising slowdown. Analysts are feeling it too, talking down the company's profit targets in recent weeks and months.

Source: Yahoo! Finance.

The pessimism isn't limited to just this year. Wall Street sees the company earning $24.29 a share next year, well off the $25.65 a share it was banking on just three month ago.

So, where is Google's next stop? $200? $400? Let's check out both scenarios.

The case for Google at $400
The good news is that at least Google is growing. The latest guesstimates find Big G's bottom line growing by 8% this year and 15% come 2010. So, even if Google is trading at a historically cheap forward earnings multiple in the mid teens, the same can be said of its near-term growth projections.

If that last point sounds bearish, let's take Google all the way down to $200. If the profit expectations bear out, Google would be trading at just 9.5 times this year's earnings and only 8.2 times next year's projected net income.

That doesn't seem likely, does it? Even if cynics rightfully point out that the trend is clearly leaning towards Wall Street's mavens taking Google's projected profitability lower, it's hard to fathom Google getting that cheap unless there is complete collapse of the company's business model.

It can happen, but that is not likely in the near term.

Along the way, Google is a company that derives nearly all of its revenue from online advertising. There is plenty of growth potential there and in other related areas.

It already has the fleet of servers, so it's not completely unbelievable to see it take on companies like salesforce.com (NYSE:CRM) in cloud computing customer relationship management apps, Akamai (NASDAQ:AKAM) in content-delivery networks, and Rackspace (NYSE:RAX) in cloud computing hosting.

It also has a ton of money in the bank, so let's not assume that growth will be strictly organic. It may have overpaid for DoubleClick and YouTube when the market was peaking, but there are now plenty of bargains at closeout prices that won't last if the market bounces back.

The case for Google at $200
At the bearish end of the betting line, inertia has certainly been pushing Google lower since peaking in November of 2007.

Google may have blown away analyst expectations with its surprisingly potent fourth-quarter results, but the economy has also gotten worse so far in 2009. Google isn't immune to the economic malaise, even if it's benefiting from the online migration of both people and sponsors. It also isn't immune to the inevitable moment when someone comes up with a better mousetrap.

What is the future of search, after all? The popularity of social networking sites like Facebook and News Corp.'s (NYSE:NWS) MySpace is making people less dependent on search. If they're looking for a good dentist in the neighborhood or want to know about a new sushi bar that opened, they have a growing army of old acquaintances to lean on.

In other words, even if someone doesn't come up with a more magnetic search engine over the coming years, the relevance of search queries and paid search may fade in time.

I don't see it happening. That's why my bet would be on Google at $400 over Google breaking below the $200 milestone.

How about you? Do you see Google hitting $200 or $400 next? Let me know in the comment box below.

Read up on Google:

• The dot-com bellwether posted healthy fourth-quarter results earlier this year.
• Google stuck it to investors by repricing its employee stock options this year.
• 10 Dividend Stocks for the Next Decade and Beyond