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. Best Sell?
You know that things aren't going Best Buy's (NYS: BBY) way when an analyst moving to a neutral rating -- and issuing a price target that is just 8% ahead of where its stock is perched -- is actually an upgrade.
Citi analyst Kate McShane bumped her rating higher on the troubled consumer electronics retailer, but the shift into neutral and the $21 price target aren't exactly bullish indications.
It's an interesting time for the upgrade. Best Buy is looking for a new CEO after closing dozens of stores. There are no indications that the negative trends that have been working against the chain are weakening. Smartphone-armed shoppers are still flocking to lower prices available through online retailers, and the cheesy up-sell of extended warranties, tech support services, and obsolescence insurance is wearing consumers down.
The stock may have fallen too far too soon, but angling for a dead cat bounce seems more risky than opportunistic for an analyst.
2. Whoa -- Megan Landry alert
How badly do you think Nokia (NYS: NOK) regrets hopping on the Windows Phone long shot of a horse instead of throwing its weight behind Android?
Shares of the company that at one time was the world's largest wireless phone maker fell sharply yesterday after it announced another retreat. Executives are being shuffled about and 10,000 more employees will be let go.
The market occasionally applauds corporate restructurings, but there's now a concern that Nokia is facing a cash crunch. Really? Didn't CEO Stephen Elop -- who may wind up being one of the worst CEO hires given his misguided allegiance to Mr. Softy -- promise that the software giant would be paying Nokia billions to back Windows Phone as its mobile operating system of choice?
One analyst -- R.W. Baird's William Power -- even lowered his stock price on Nokia to a mere $2 after yesterday's retrenchment.
3. Research falls short
FactSet Research Systems (NYS: FDS) knows a thing or two about how to break down earnings reports. It serves financial services professionals with high-end research to make intelligent portfolio decisions.
In short, it probably knew just how the market would react when it posted reasonable quarterly results, but followed that up with top-line guidance for the current quarter that's short of where analysts were perched.
After generating $202.3 million in revenue in its fiscal third quarter, FactSet is now targeting revenue of $204 million to $208 million for the new fiscal fourth quarter. Wall Street was hoping for $210 million, so the shares took a 12% slide on Tuesday.
4. Zynga song, a swan song
Zynga (NAS: ZNGA) was a hot social gaming darling, and then it went public.
The stock temporarily dipped below $5 this week -- or half off its December IPO price of $10 -- after an ominous analyst note.
Cowen & Co. analyst Doug Creutz warned that the daily average unique users across Zynga's games on the leading social networking website have fallen by 4.8 million -- to 54.2 million -- over the past month.
It's an incomplete diss. Yes, casual gamers are migrating from desktops to mobile. However, aren't there plenty of folks playing Words With Friends and Draw Something on their smartphones?
Morgan Stanley sort of came to Zynga's defense two days later.
Morgan Stanley analyst Scott Devitt argued that measuring daily average users is an imperfect gauge in predicting the company's bookings. That sounds positive, but Devitt also points out that the bigger problem is that games are peaking sooner. The pressure is now on Zynga to keep cranking out hit games. It won't be easy, and even Devitt lowered his price target on the stock.
5. You're getting a dividend, dude
Shares of Dell (NAS: DELL) climbed 2.6% higher on Wednesday after the company initiated a dividend policy. The struggling PC maker will begin paying out $0.08 a share every three months.
Investors know that there's no such thing as a free lunch. Right? Dell's stock popped the equivalent of a year's worth of Dell dividends, but the move does little to change the fact that the company has been slow to capitalize on the "good enough" computing trend that finds consumers turning to smartphones and tablets instead of PCs and laptops for rudimentary computing needs.
All the dividend does is take money out of Dell's bank and turn it into a taxable event for most investors.
There's nothing wrong with initiating a dividend, but this doesn't solve Dell's problems.
Don't be a dumb investor. Check out the three stocks leading a new industrial revolution in this country. Sure, it's a free report. Check it out before it's gone.
At the time this article was published The Motley Fool owns shares of Best Buy.Motley Fool newsletter serviceshave recommended buying shares of FactSet Research Systems. 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. Rick is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
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