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. More Zynga zingers
Maybe we should start dishing out weekly updates on the Zynga (NAS: ZNGA) executives and managers that are still there.

The social gaming giant has lost another key executive.

Laurence Tony, who headed up Zynga Poker for two years before moving on earlier this year to be the general manager of mobile publishing, has apparently moved on. AllThingsD discovered the departure after Toney updated his LinkedIn profile.

Zynga, you have a problem.

Sure, the share price is trading for a quarter of what it was at the time of its IPO. However, something seems to be eating away at the spirit of high-ranking employees at Zynga. Retention efforts need to be picked up, or the company needs to boost its bravado and explain why it's better off without many of these seemingly key hires.

2. Edwards scissors hands
A company making trans-catheter heart valves should never force its shareholders to skip a beat.

Edwards Lifesciences (NYS: EW) took a hit after the company warned on Monday that revenue will fall short of its original forecast.

The medical-device maker now sees revenue of approximately $448 million for the quarter that ended last month. The earlier guidance was projecting top-line results of $465 million to $485 million. It may not seem like much of a miss, but let's break this down into year-over-year growth. Edwards Lifesciences was originally telling its stakeholders to expect revenue to grow 13% to 18% this year. Now it's lowering that target to a mere 9%.

3. Rocking the rocking chairs
Did Sardar Biglari buy into Steak 'n Shake because once he takes a stake in a company he likes to shake things up?

Biglari has apparently snagged an oversight in Cracker Barrel's (NAS: CBRL) proxy statement, and he's pouncing on it.

The activist investor unearthed that incoming chairman James Bradford -- described by proxy statements and even Cracker Barrel's CEO as a "former NYSE company CEO" -- was running the company in question four years after it was taken private.

Is this really such a big deal? This isn't a falsified college degree or something incendiary. Bradford was CEO of a glass maker that is technically a "former NYSE company" now.

More to the point, Biglari should be pleased with his 17.3% stake in Cracker Barrel. The stock has soared nearly 70% over the past year, and the casual-dining chain has taken an aggressive approach to share buybacks and dividend distributions. Biglari's meddling ways have probably played a major part in that. There's no reason for him to stop. However, now that the stock is humming along, is he really going to get shareholders to take a battering ram to the rustic eatery's rocking chair-lined porch? Whether the mistake was a "misunderstanding" as the company contends or "misleading" as Biglari counters, it's not much of a smoking gun.

It's a cap gun -- and you can usually find those on the far right corner of the Cracker Barrel gift shops.

4. Waiting to exhale
Monster Beverage (NAS: MNST) lost some fizz after an analyst downgraded the energy-drink maker.

Stifel Nicolaus analyst Mark Astrachan lowered his rating on Monster -- from buy to hold -- fearing the growing regulatory risks and slowing sales growth.

Really? Now? The stock had already surrendered nearly a third of its value since its springtime peak.

Astrachan also sees sales at Monster growing in the mid-teens through at least the next three years. Monster may not be a screaming bargain at 22 times next year's earnings, but it's certainly a reasonable premium given its market-thumping growth.

5. Microsoft transforms into Microhard
Signaling a monumental shift in its strategy, Microsoft (NAS: MSFT) wants to be about devices and services.

"We see ourselves ... as a devices and services company," CEO Steve Ballmer writes in the company's 2012 letter to shareholders. "There will be times when we build specific devices for specific purposes."

Ballmer is referring to the upcoming Surface tablet, but this may as well be a hint that the company will be putting out its own smartphones, PCs, and other gadgets in the future.

Is that such a smart strategy? The Xbox turned into a hit, but only as a low-margin business in an industry that's been in a state of decline for three years. Other forays including the Kin phone and Zune media player have been hardware busts.

Perhaps more important, this isn't going to sit well with its partners. How will PC makers feel about promoting Windows 8 or handset manufacturers feel about backing Windows Phone if Mr. Softy will come in and compete against them?

It's a dangerous strategy for Microsoft given its track record in hardware.

Get smart
Zynga's post-IPO performance has been dreadful, and investors are beginning to wonder if it's game-over for this newly public company. Being so closely related to the world's largest social network can be a blessing and a curse at the same time. You can learn everything you need to know about this company and whether it's a buy or a sell in our new premium research report. Don't even think about picking up shares before you read what our top analysts have to say about Zynga. Click here to access your copy.

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Longtime Fool contributor Rick Aristotle Munarriz owns shares of Cracker Barrel Old Country Store. The Motley Fool owns shares of Microsoft. Motley Fool newsletter services recommend Monster Beverage. 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.

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Originally published