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. Panned aura
Investors in music-discovery giant Pandora (NYS: P) didn't like what they discovered in the dot-com speedster's latest quarterly results.
Yes, Pandora is growing at a healthy clip, but analysts were expecting greater revenue and a narrower deficit than what the streaming service delivered.
Pandora's stock tumbled 24% on the news, so you know this is about more than just a quarterly blip. The company's guidance calls for a sharp sequential drop in revenue. Who knew that streaming music was seasonal? The company behind the "Music Genome Project" also warned of a larger deficit for all of 2012 than the pros were forecasting.
Pandora now has 47 million active users, and they streamed a whopping 2.7 billion hours of music this past quarter. However, even these healthy metrics raise some red flags. How can the volume of listening soar 99% but revenue only climb at a 71% clip? Shouldn't Pandora's growing popularity mean that it can make more -- not less -- off its users?
Oh, and why is subscription revenue growing even slower than ad revenue? Despite Pandora's push to turn its casual users into premium accounts, a greater percentage of its listeners are more than happy with the ad-supported service for freeloaders.
One pro who got this one way wrong is Stifel Nicolaus analyst Jordan Rohan. He actually upgraded the stock on Monday, a day before the debacle.
Pandora? Panned aura is more like it.
2. Bad coffee
Green Mountain Coffee Roasters (NAS: GMCR) is getting roasted today, after Starbucks unveiled a single-cup coffeemaker that it will roll out in time for this year's holiday shopping season.
Verismo isn't like Green Mountain's industry-leading Keurig system. It's more along the lines of Tassimo, Senseo, and CBTL as single-serving brewers that make coffee as well as fancier barista fare including espresso and latte. Those systems haven't gotten in the way of Green Mountain's success.
However, this move still makes the cut because Green Mountain granted Starbucks the right to be the exclusive "super premium" brand for K-Cups. Did Green Mountain really give Starbucks that kind of exclusivity even if it were to roll out its own platform?
3. Blame it on the name
Apple (NAS: AAPL) is going to sell a ton of its new tablets later this month, but let's rip into Apple for the name itself.
The new iPad? Really, Apple? Will next year's model be the "newer" iPad? Will it still be marketed as "the new iPad" in a few months? If confused consumers simply narrow the name down to iPad -- and rightfully so -- will it confuse folks buying them through third-party sellers? One can just imagine folks thinking they were buying a third-generation iPad through Craigslist winding up with an original 2010 model.
I get why iPad 3 would've been disastrous. If the iPad 3 is 4G and the iPhone 4S is 3G, Apple's marketers would have an uphill battle. Unfortunately, that's exactly what they have with the name that they ultimately chose.
They'll still sell like crazy, but c'mon, Cupertino.
4. RIM shot
Just when you think Research In Motion (NAS: RIMM) has hit rock bottom, a trapdoor cracks open to send it another level lower.
BMO Capital analyst Tim Long is lowering his price target on the BlackBerry maker from $15 to $12.
Long fears that the late introduction of phones running on the upcoming BlackBerry 10 operating system update will result in lower smartphone sales at lower price points this fiscal year. Once the undisputed industry leader, BlackBerry has seen its market share slip to 15% in comScore's latest report.
5. All the news that's fit to Sprint
There were a few losers in Wednesday's iPad unveiling. Rival tablet makers and mobile hot spot companies are naturally on the wrong end of Apple's new iPad.
However, perhaps the biggest loser is Sprint Nextel (NYS: S) . The new iPad is 4G LTE, and -- once again -- only its two larger wireless carrier competitors are selling it. Sprint's already taking a monster hit on margins to sell the iPhone, but it can't complete the suite.
At the time this article was published The Motley Fool owns shares of Apple and Starbucks. Motley Fool newsletter services have recommended buying shares of Green Mountain Coffee Roasters, Starbucks, and Apple. Motley Fool newsletter services have recommended creating a lurking gator position in Green Mountain Coffee Roasters, writing covered calls on Starbucks, and creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story, except for Green Mountain. Rick is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
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