Google has thus far today dropped another 5% of its stock price to drop below the $500 mark for the first time since last August. Remember, up until the final days in December the stock was still over $700 a share, and it was near the $750 a share level (with everyone talking $1000) back in November.

So what is it that’s caused such a rapid swing? Well it’s seemingly been 3 main factors:

1) the crap economy
2) missed earnings for the first time
3) Microsoft trying to buy Yahoo

Yet even with those three major developments, it seems a bit odd that Google would fall so far so quickly.

Yes, Google missed Wall Street projections of price per share – by one penny. Net revenue was off – of the projections – $60 million dollars, but still up. And when you consider the revenue was $3.39 billion dollar, $60 million doesn’t seem like an unreasonable amount to be off in a slowing economy that analysts no doubt didn’t anticipate to slow as much as it did. Net income rose, revenue rose, revenue from AdSense rose – and they all rose substantially. Yet still everyone is freaking out.

And so, in some ways we have a case of perception being reality. Google is really not much different today then they were in November when they were at $750. Even if a Microsoft purchase of Yahoo were to go through, Google would still have the absolute dominant position in both search and online advertising – where the money comes from.

It’s a lot like the situation with Apple right now – bad…for short-term investors.

With online advertising still expected to grow despite a worsening economy, unless Google really messes something up in the next year, this rapid descent in stock price may just mean one thing for a lot of people: buy.

More thoughts:

• Google Profit Raises 17%, Stock Tanks
• Apple and Google Stocks Get Slammed