Barclays analyst Ross Sandler warns that Alphabet (GOOGL, Financial) could face a significant stock price decline if ordered to divest its Chrome browser. This scenario, linked to an antitrust lawsuit with the U.S. Department of Justice, could lead to a 15% to 25% drop in Alphabet's stock, described as a "black swan event."
In a landmark antitrust case, Judge Amit Mehta ruled that Google monopolized the search engine market, particularly in "general search" and "general search text" ads. The Justice Department argues for Chrome's divestiture, data sharing with competitors, and banning exclusive deals that make Google the default search engine on devices.
Sandler notes that Chrome, with 4 billion users, contributes 35% to Google's search revenue. The potential divestiture would be a major blow, impacting Alphabet's earnings per share by up to 30%. He suggests AI companies like OpenAI could acquire Chrome if divested.
Despite the uncertainties, Sandler maintains an "overweight" rating on the stock. Alphabet plans to appeal the ruling, and a decision on remedies is expected in August. Alphabet also agreed to a $500 million compliance restructuring to settle shareholder antitrust allegations.
