Week's Winners and Losers: Amazon Tweets, Organics Retreat
From the developer behind the "Candy Crush Saga" phenomenon posting sweet results to the leading organic grocer pruning back its outlook for the third time in recent months, here's a rundown of the week's smartest moves and biggest blunders in the business world.
Amazon.com -- Winner
There are 255 million active users on Twitter (TWTR), and Amazon.com (AMZN) is doing a better job at reaching them. Amazon and Twitter announced a new way for Twitter users to have Amazon-sold products they see mentioned in a tweet get instantly added to their Amazon shopping carts: Simply reply to any tweet featuring an Amazon merchandise link with the #AmazonCart hashtag to have the product added to your virtual shopping cart.
It may seem hokey. Do your Twitter followers really need to know that you're buying the first season of "Orphan Black" on DVD? However, this is a big win for Amazon because it will get more Twitter users to include Amazon product links in testimonials.
The new hashtag will also work with members of the Amazon Associates plan that bloggers and webmasters use to generate commissions when broadcasting Amazon links that result in a sale. In other words, a lot of people will have a financial interest in promoting #AmazonCart on Twitter.
Groupon (GRPN) -- Loser
The daily deals leader checked in with fresh quarterly results. It was solid on the surface with Groupon's revenue climbing a better than expected 26 percent. Its adjusted profit of 1 cent a share also clocked in better than the small deficit that analysts were targeting.
However, an earnings report is only as good as its guidance, and that's where Groupon fell short. Groupon is forecasting revenue in the second quarter to clock in between $725 million and $775 million. At the midpoint, we're talking about less than the $757.6 million that it just scored in the first quarter as well as the $754.4 million that Wall Street was projecting. The flash sale specialist is also calling for bottom-line results to fall short of the 3 cents a share that analysts were expecting.
King Digital Entertainment (KING) -- Winner
King Digital's "Candy Crush Saga" is the hottest mobile game out there, and it showed in the first quarter as a public company. Gross bookings nearly tripled to $641.1 million, and adjusted earnings more than tripled to hit 61 cents a share.
King Digital went public at $22.50 in late March only to tumble on fears that it's a one-trick pony. Too much of King's success is riding on a single candy-crushing title, and investors were burned by Zynga (ZNGA) as an investment a couple of years earlier. However, on Wednesday King Digital bragged about having three games in the top 10 grossing games list on all major mobile platforms for the quarter. It's also generating a lot more revenue and earnings than Zynga did when it peaked. The stock is still trading below its initial public offering price, but it is helping slay Zynga's demons with a strong debutante quarter.
Whole Foods Market (WFM) -- Loser
Organic groceries are still popular, but not popular enough. Whole Foods Market shares plunged after the leading organic supermarket chain followed up an uninspiring quarterly report with yet another downward revision for the entire year.
%VIRTUAL-article-sponsoredlinks%Sales, earnings and same store sales all rose during the period, but at slower rates than analysts were expecting. Whole Foods also trimmed it outlook, and it's not the first time that we've seen Whole Foods take a weed whacker to its 2014 projections.
Whole Foods was originally expecting sales to climb 12 percent to 14 percent this year. Three revisions later we now see the grocer pegging its top-line growth prospects at no more than 10.5 percent to 11 percent. There's an "organic growth" joke in there, but shareholders aren't laughing.
Video Games -- Winner
The country's two largest video game publishers reported on Tuesday afternoon, and shares of Activision Blizzard (ATVI) and Electronic Arts (EA) jumped at the open on Wednesday on the encouraging results. Both gaming software giants posted better than expected revenue and earnings for the quarter covering the first three months of the year.
Activision and EA both saw their revenue decline during the period. However. the market was bracing for sharper drops at both companies. We're early into the migration cycle for the Xbox One and PlayStation 4, and the new consoles are organically incompatible with games for older systems. This naturally cools off sales for Xbox 360 and PS3 owners that plan on upgrading their systems. Activision and EA held up better than expected and the market rewarded that on Wednesday.
Motley Fool contributor Rick Munarriz has no position in any stocks mentioned. John Mackey, co-CEO of Whole Foods Market, is a member of The Motley Fool's board of directors. The Motley Fool recommends Activision Blizzard, Amazon.com, Twitter and Whole Foods Market. The Motley Fool owns shares of Activision Blizzard, Amazon.com and Whole Foods Market. Try any of our newsletter services free for 30 days.
