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. LeapFrog doesn't turn into a prince
LeapFrog Enterprises lowered the bar in November, but it wasn't low enough.
The maker of electronic learning toys slumped 9% on Thursday after posting disappointing quarterly results. Sales plunged 24%, with stateside revenue taking a huge 30% hit. Just three months ago, LeapFrog spooked the market by forecasting that sales would slip by 9% to 17% during the period.
LeapFrog knows it's in a pickle. Young kids are firing up educational apps on their parents' tablets, making its learning products less appealing. LeapFrog's tablets are too limited. LeapFrog sees a return to sales growth in the second half of the year, but it's hard to take that seriously. It didn't have enough visibility to accurately predict how bad its holiday quarter would be with a few weeks to go. How are we to trust a call that's several months away?
2. Three strikes and you're tout
Galena Biopharma saw its stock tumble 16% on Wednesday after a dubious touting scandal was revealed. TheStreet.com unearthed proof that the fledgling biotech paid $50,000 to a firm this summer to promote the stock for eight months.
The news coincides with Seeking Alpha removing articles from its blog site after discovering that they were written by the same person under two different names. Similar actions were taken by the site last year when five articles were written by the same person under three different aliases.
These actions don't necessarily discredit Galena's ambitious goal to get a breast cancer vaccine to market. However, it does lead one to wonder if the stock's huge run-up in recent months was more hype than substance.
3. Angie's buying a stairway to heaven
Angie's List saw its shares slump as much as 21% yesterday -- ultimately rallying during the final hour of trading to close just 7% lower -- after offering up weak guidance.
The premium platform that delivers vetted reviews of local service providers sees revenue for the current quarter clocking in between $71.5 million and $72.5 million. Analysts were holding out for $74.3 million. It may not seem like a big deal, but investors have grown concerned about Angie's List ability to keep folks paying at a time when free social networking and review websites are easily accessible.
Angie's List may be holding up well on the attraction front, closing out the year with nearly 2.5 million paying members. That's a welcome 39% pop in 2013. However, ever since it was testing lower subscription rates in a couple of key markets investors began to grow concerned about growth in the future. Soft guidance for the current quarter isn't going to silence those concerns.
4. Between a Nook and a hard place
Barnes & Noble shares rallied after reports surfaced that it was laying off hardware engineers working on its Nook.
The market's reaction may indicate that this is a smart move. After giving mixed signals about what direction it will take with the Nook as it has expanded the line, contracted the line, and attracted notable investors we're now seeing that the end is near. The sharp plunge in related sales in recent quarters reveals that the Nook was dead long before the leafy superstore chain realized it. However, Barnes & Noble and the market seem to believe that the company will be able to continue to make a dent on the higher-margin content side of its digital platform.
That's a stretch. It's hard to sell digital content at competitive prices while your physical bookstores are selling the actual reads closer to retail prices. Barnes & Noble remains a contradiction, and now it remains that way with a few less brainy engineers around.
5. TV party
This isn't the way that Steve Jobs thought things would play out. Apple's push into smart TVs remains uninspiring. The Wall Street Journal reported this week that the fourth generation of Apple TV will work with cable and satellite television providers to offer up streaming rights to subscribers already paying for those channels.
In short, this isn't the appliance that cord cutters have been dreaming about. Instead of carving a new path by striking deals directly with content creators to offer a Web-based service where video is purchased piecemeal, Apple's apparently settling for the status quo. It didn't have a choice, bulls will argue. It can't take what the studios are reluctant to provide. That's true, but with iPad and iPhone sales growth slowing to the single digits during the holiday quarter, Apple needed something new and disruptive to win back growth investors. This isn't likely to be it.
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The article This Week's 5 Dumbest Stock Moves originally appeared on Fool.com.
Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Apple and LeapFrog Enterprises. It also owns shares of Barnes & Noble. 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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