This Week's 5 Dumbest Stock Moves
Stupidity is contagious. It gets us all from time to time. Even respectable companies can catch it. As I do every week, let's take a look at five dumb financial events this week that may make your head spin.
1. Low blow on high prices
Amazon.com's (NAS: AMZN) updated Price Check application is as cool as it is cruel.
In a move to draw attention to its comparison shopping app, the online retailer decided to offer users 5% off on up to three qualifying items that they scan at brick-and-mortar stores this past weekend. More often than not, they'll realize that Amazon has a better price so they'll just leave the store empty-handed.
Barcode scanning apps have been around for a couple of years, but why is Amazon rubbing it in with a promotion that rewards users who tease local merchants with spying visits? Area retailers already loathe the pricing advantages inherent in Amazon's model, but they have no choice other than to accept it. Now Amazon is arming them with the ability to flag the e-tailer for taunting. Grassroots displeasure is starting to build. An #OccupyAmazon hashtag is firing up on Twitter.
Maybe Amazon should've gone with a Reality Check app before rolling out this Price Check promotion.
Earnings fell, as they have every quarter for more than a year now. After a string of negative comps the retailer did manage to post a modest 0.3% increase, but is that a fair assessment of store-level performance?
Best Buy -- like many retailers -- lumps its website sales into the reported comps. BestBuy.com sales climbed 20% during the quarter, so it's a fair bet that physical store sales continue to be weak. Best Buy was also offering some ridiculous Black Friday deals by quarter's end, so even if sales held up, gross margins were roughed up by the Blue & Yellow crew.
Oh, and that 20% in Internet sales isn't really all that impressive when the much larger Amazon.com is growing at twice that clip.
3. The grass is always greener on the other side of Green Mountain
Analysts can't seem to agree on Green Mountain Coffee Roasters (NAS: GMCR) . There's nothing inherently wrong with that, but it would be nice if the disagreements were at least on the same page.
Shares of the java giant took a hit after Stifel Nicolaus' Mark Astrachan issued a bearish note on the company behind the Keurig single-cup system. Astrachan argues that Keurig brewers being imported from China fell in October and November. KeyBanc Capital Markets analyst Akshay Jagdale countered, suggesting that the declines aren't comparable because of changes in the way that the information is traced.
Either way, there's obviously more to gauging a company's success than Chinese imports. What if Green Mountain is addressing a popular bearish knock on bloated inventory levels in its latest quarter? Won't incremental sales of brewers still result in brisk K-Cup sales, where Green Mountain's healthiest margins like to party?
Incomplete snapshots move stocks, but not always in a way that's fair.
No one should be surprised that Research In Motion (NAS: RIMM) delivered a disappointing quarterly report last night. That's been the nature of the BlackBerry beast for several quarters.
However, I did take the company to task for this juicy disclaimer on its order page for RIM's PlayBook tablets:
Notice to Customers: Due to high volume of PlayBook orders, orders may take up to 7-14 business days to ship.
Wasn't the PlayBook a dud? Why is RIM trying to sell them for $500, and tricking folks into thinking that they're selling well, when it was clearing them out at $199 for a limited time a couple of weeks ago? Wasn't this the same company that issued a gloomy press release two weeks ago -- claiming that it has a problematically "high level of BlackBerry PlayBook inventory" -- and, in fact, took a $485 million inventory provision charge in last night's report?
I hope that E*TRADE didn't pay too much for that advice. Shares are closing in on a two-year low after posting disappointing trading activity for the month of November. Daily average revenue trades fell by 10% in November relative to October -- and 11% compared to November of last year.
We can't judge the well-marketed discount broker based on a single month's performance, but it isn't easy being single these days -- even for an E*TRADE baby.
If you want to track these companies to make sure that they don't make another dumb mistake soon, consider adding them to My Watchlist.
- AddResearch In Motionto My Watchlist.
- AddGreen Mountain Coffee Roastersto My Watchlist.
- AddE*TRADE Financialto My Watchlist.
- AddBest Buyto My Watchlist.
- AddAmazon.comto My Watchlist.
At the time this article was published Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story. Rick is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.The Motley Fool owns shares of Best Buy and Amazon.com.Motley Fool newsletter serviceshave recommended buying shares of Amazon.com and Green Mountain Coffee Roasters.Motley Fool newsletter serviceshave recommended creating a lurking gator position in Green Mountain Coffee Roasters.Motley Fool newsletter serviceshave recommended writing covered calls in Best Buy. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.
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