Google: A stock disaster waiting to happen?

Google (GOOG) was not a publicly traded company when the internet bubble burst in 2000 sending stock prices hurtling back to earth. But with its stock trading at a euphoric 465-plus, could it face the same fate as those internet companies that came unglued nearly six years ago?

Henry Blodget's post titled "Google: The Bear Case" depicts an interesting scenario.

No one else is writing this piece, so it will have to be me. I should say upfront that I'm not predicting that this will happen (yet), and I'm certainly not making a recommendation. I'm just laying out a scenario that could kneecap Google and take its stock back to, say, $100 a share.

"Google's major weakness is that it is almost entirely dependent on one, high-margin revenue stream," Blodget writes. Eventually the growth of this revenue stream will cease causing valuation multiples to drop. But disaster really comes if search-ad fraud or click fraud increases. Ad revenues would drop dramatically compounding declines felt by an already maturing business and multiples would really tumble.

Henry Blodget was the head internet analyst at Merrill Lynch during the bubble years from 1998 until 2002. It was 2002 when Eliot Spitzer published Merrill Lynch internal emails depicting the fraud behind some analysts' published stock recommendations. In 2003 Blodget was charged with securities fraud by the SEC. He settled but is banned for life from the securities industry. His blog is called Internet Outsider.