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. Another Zynga zinger
Zynga keeps playing SmallVille.
The social gaming giant behind FarmVille and Words With Friends continues to lose gamers, and now it's cutting lose some more of its game makers.
Zynga revealed that it will be letting go of 520 employees -- or roughly 18% of its workforce -- in the coming weeks. The move will shave as much as $80 million in annualized overhead at the company, but what will it do to shore up business if morale is on the wane?
Last year, it was losing executives, as its cascading share price made the once-juicy stock options less lucrative. Now, it's showing the loyal folks that stuck around during the managerial exodus the door.
It's not the way you play the game if you want to win.
2. Panned aura
Shares of Pandora slumped 11% on Monday after reports surfaced that Apple is one step closer to rolling out its iRadio streaming service.
There's just one major label that has yet to sign off on iRadio.
It's a broken record at this point. We've been hearing about iRadio's rollout for months, and it seems as if Pandora always takes a hit on the news. It doesn't make sense. iRadio will likely be a premium music service, yet all but 2.5 million of Pandora's more than 70 million active listeners are free users.
Other tech giants have also rolled out music streaming services, and Pandora just keeps on growing. Have we forgotten the rise and fall of iTunes Ping as a short-lived social music experiment? Are we ignoring the inability of iTunes Match to gain traction as a cloud-based digital music locker?
There may very well come a time for a shakeout of the now-crowded music streaming market, but Pandora's unlikely to be a casualty. Monday's sell-off was dumb.
3. Who's your caddy?
Callaway Golf may have ushered in a new era in golfing with its oversized Big Bertha drivers, but these days, the golf gear maker keeps landing in the rough.
Wedbush downgraded Callaway Golf -- from "outperform" to "neutral" -- this week.
It's easy to see why the market has soured on Callaway. Analysts see another loss this year on a slight decline in revenue. This is a stark contrast to other luxury goods retailers that are thriving these days. If high-end handbags and jewelry items are thriving, and this premium club maker is getting clubbed, it has to be a problem with the company itself.
4. Fizzy lifting drinks are great until you see the blades
Shares of SodaStream opened sharply higher on Thursday after sources told Israel's Calcalist that PepsiCo had submitted a $2-billion buyout offer.
Now, the Hebrew daily business publication is certainly credible. This was the same source that broke the news last month about Israel's Waze being in play. That continues to be the case today. However, this story didn't make sense. SodaStream may be a great acquisition target, but it's not going to come from a company that has far more to lose than gain in a buyout.
Pepsi would be validating SodaStream's model with this purchase at the expense of its far more lucrative canned and bottled carbonated soda business. PepsiCo would be ruffling the feathers of its bottlers, and betraying its recent history of buying companies that move it away from sugary soft drinks.
SodaStream's heavy short interest makes it an easy candidate for a short squeeze, but we deserve more feasible buyout rumors moving stocks higher.
5. There's no such thing as a Quiksilver lining
It's not a surprise when retailers that are out of favor do poorly, but it is a shock when the good ones prove mortal.
Analysts had high hopes for Quiksilver heading into Thursday afternoon's quarterly report. They saw the retailer of extreme sports apparel posting a small profit on a modest uptick in sales.
Well, it missed on both fronts. Quiksilver actually posted a widening deficit on a startling 7% drop in revenue. It's updating its guidance accordingly. Even though Quiksilver's weakness stemmed from its international operations -- stateside growth was positive -- it's still not pretty when the good ones let you down.
With so much of the financial industry getting bad press these days, it may be a "greedy when others are fearful" moment. Not surprisingly, some of Warren Buffett's biggest investments are in the space. In the Motley Fool's free report, The Stocks Only the Smartest Investors Are Buying, you can learn about a small, under-the-radar bank that's too tiny for Buffett's billions. Too bad, because it has better operating metrics than his favorites. Just click here to keep reading.
The article This Week's 5 Dumbest Stock Moves originally appeared on Fool.com.Longtime Fool contributor Rick Munarriz owns shares of SodaStream. The Motley Fool recommends Apple, PepsiCo, and SodaStream. The Motley Fool owns shares of Apple, PepsiCo, and SodaStream. 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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