Will Google face a "black swan"? Barclays: If the judge rules to divest the search business, the stock price is expected to plummet by 25%!

According to the Zhitong Finance APP, Barclays analysts pointed out in a report to investors on Monday that if U.S. District Judge Amit Mehta orders Alphabet's Google (GOOGL.US) to sell its Chrome browser, the stock price could drop by 15% to 25%, which could become a "black swan event."

It was reported that in August 2024, Google lost a landmark antitrust lawsuit against the U.S. Department of Justice. Judge Mehta ruled that the tech giant monopolized the search engine market, particularly in the "general search" and "general search text" advertising markets (i.e., ads that appear at the top of search results pages).

According to reports, last Friday, Google and the U.S. Department of Justice concluded their closing arguments in the legal remedy phase of the case. The Department of Justice argued that Mehta should force Google to divest its web browser Chrome, share search data with competitors, and prohibit it from ensuring Google becomes the default search engine for mobile devices and browsers through exclusive agreements.

Barclays analyst Ross Sandler wrote in Monday's report that after the closing arguments, "we believe the likelihood of Chrome being divested, while low, has increased," adding that "the most likely candidates to acquire Chrome" could be "well-funded AI companies like OpenAI, Anthropic, or Perplexity."

Sandler noted that given Chrome has 4 billion users, accounting for 35% of Google's search revenue, this outcome would be a "significant blow" to Google.

He stated, "This would be a major event and a black swan event for Alphabet's stock price. If this situation does occur, the stock price would obviously drop significantly, as none of the investors we spoke to believe this scenario will happen."

Sandler mentioned that divesting Chrome could not only lead to a 25% plunge in Alphabet's stock price but also pose a potential 30% impact on its earnings per share.

Sandler also remarked, "The reality is that we do not know what kind of ruling the court will make regarding the remedies. We listened to closing arguments all day, and sometimes we felt the situation was much worse than before, while at other times we felt (the impact on Alphabet's stock price) might be somewhat better." He has a rating of "overweight" on the stock.

Judge Mehta is expected to rule on the remedies for the case along with the fate of Google's search empire in August. Google announced last Saturday that it would appeal the case.

Additionally, on Monday, Alphabet announced it would spend $500 million to adjust its compliance structure to settle shareholder allegations that the company violated antitrust laws.

On Monday, Alphabet's stock price fell by 1.6%, down 10.6% year-to-date