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. Purple science
Yahoo! (NAS: YHOO) has been through a few colorful CEOs over the years, but now there's one that apparently embellished his resume.
Third Point's Dan Loeb did a little digging on new CEO Scott Thompson's claim that he received a computer science degree from Stonehill College. Apparently he only acquired an accounting degree. The school didn't even offer a computer science degree until four years after Thompson had graduated.
Yahoo! later admitted that it was an "inadvertent error," but shareholders don't appreciate being misled, especially since the same error was repeated earlier when he was at PayPal. Surely Thompson must've read over his bio at either company. Who cares if accounting isn't a cool major in Silicon Valley? Thompson was hired because of his achievements and track record. That should be enough to refrain from having little white lies in executive bios creeping up.
Net sales climbed 37% during the fiscal second quarter. That may not seem too shabby, but back in February the java heavy was projecting revenue to grow 45% to 50% during the period.
That's not cool. When a company that has historically issued conservative guidance falls short, it's a sign that sales were starting to fall apart. Investors were already fretting about the fate of Green Mountain's model once its Keurig K-Cup patents expire in September. Now they have to fret about the company falling short before even getting to that finish line.
Was the miss -- and the slightly downward revision of its guidance for all of fiscal 2012 -- worth the stock shedding nearly half of its value? It's not about valuation. It's about a crisis of faith in management.
3. Pop quiz
The market loves sympathy plays. If a movie's a big hit, multiplex operators will inch higher. If a hurricane is coming, investors bid up home improvement stores. However, Mr. Market can be a big dummy sometimes.
Shares of SodaStream (NAS: SODA) closed nearly 10% lower yesterday, and the only feasible explanation was Green Mountain's horrendous report.
Investors tend to lump SodaStream and Green Mountain together as providers of home-based beverage solutions, but this sympathy play makes no sense.
How can Green Mountain selling fewer coffee portion packs play into SodaStream's business? If anything, Green Mountain's report may actually benefit the pop star. After all, Green Mountain pinned some of its weakness on the unseasonably warm weather. Folks were going through its seasonal hot cocoa and apple cider K-Cups the way they used to once February and March in particular began to heat up.
Well, isn't that the perfect time for a cold, refreshing soft drink?
4. Firing blanks
Activision Blizzard (NAS: ATVI) is making it official: Call of Duty: Black Ops 2 hits retailers on Nov. 13. The industry's hottest franchise hasn't been enough to save Activision Blizzard in recent years, and this time it may be biting off more than it can chew.
Activision Blizzard is cranking out the game a week after the long-awaited Halo 4 hits the market. Yes, there's an entire world outside of the Xbox for Activision Blizzard, but why didn't it break from mid-November tradition and gun for late October or later in November?
Pre-orders for Call of Duty: Black Ops 2 may be off to a strong start, but Activision Blizzard can't afford to take chances with its last major workhorse.
5. Book burning
Barnes & Noble (NYS: BKS) had a huge run early on Monday. The stock soared as much as 90% higher after it was revealed that Microsoft would be making a sizable investment in the bookseller's profitless but growing Nook business.
The first wave of speculators hopped on after realizing that the implied value of Microsoft's stake in the new company was worth far more than Barnes & Noble's market cap.
Silly assumers. Barnes & Noble is still no closer to profitability, and Microsoft's investment may slow the Nook platform down if it involves any concessions.
Barnes & Noble quickly retreated after peaking at $26. The stock closed lower every day after that. As of yesterday's close, the book superstore chain had given up nearly two-thirds of its Monday intraday gains.
At the time this article was published The Motley Fool owns shares of SodaStream International, Yahoo!, and Microsoft. The Fool owns shares of and has written calls on Activision Blizzard.Motley Fool newsletter serviceshave recommended buying shares of Yahoo!, SodaStream International, Microsoft, Green Mountain Coffee Roasters, and Activision Blizzard.Motley Fool newsletter serviceshave also recommended writing puts on Barnes & Noble, creating a bull call spread position in Microsoft, creating a synthetic long position in Activision Blizzard, and creating a lurking gator position in Green Mountain Coffee Roasters. The Motley Fool has adisclosure policy. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.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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