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 from this week that may make your head spin.

1. Expedia-li-atrocious
Shares of Expedia (Nasdaq: EXPE  ) soared 9% on Tuesday. Reuters pegged the gains to rumors of Google (Nasdaq: GOOG  ) snapping up the travel portal.

This isn't the first time that the "Google is buying Expedia" chatter has made the rounds. An analyst suggested the pairing a year ago. It didn't make sense then. It doesn't make sense now. Why would Google buy a travel reservations site?

Yes, Expedia is nicely profitable, if you don't count one-time charges. Its stock is also trading at an attractive valuation, in my opinion. However, Google thrives by collecting paid search revenue from all of the world's travel sites. Won't these advertisers see a Google-owned Expedia as a conflict of interest? Of course they would. Google may beef up its travel content, but it's not going to pick favorites if it means alienating the rest of the players. Predictably enough, Expedia shed more than half of Tuesday's gains by Thursday.

2. Taking it to TheStreet.com
Making a mint in the market is often about timing, so what can one say about the timing of TheStreet.com's (Nasdaq: TSCM  ) layoffs? The financial media company is letting go 18 employees, or roughly 6% of its workforce.

It may not seem like much, but the company announced the payroll reduction yesterday, after what has been two weeks of mostly robust stock market gains. If investors are hungry for stock ideas in today's kinder climate, shouldn't TheStreet.com be beefing up its content and subscription services instead of scaling back? It also doesn't help that the company lost its CEO just a week ago.

3. Dousing Kindle
It hasn't been a good week for Amazon.com's (Nasdaq: AMZN  ) Kindle.

First, Amazon was slapped with a patent infringement lawsuit, stemming from the copyright protective features of the Kindle. Then came the news that Google was teaming up with Kindle's biggest rival -- Sony's (Nasdaq: SNE  ) Reader -- to offer up 500,000 public domain titles for free through the Reader's online store.

Great! One move threatens Amazon's past and may hamstring its future. The other move threatens to devalue the perceived value of electronic books.

Oprah, where art thou? Methinks the Kindle needs another shout-out to get back on track.

4. Fed up with FedEx
I'm still scratching my head over yesterday's 5% gain in shares of FedEx (NYSE: FDX  ) , even though the company badly missed Wall Street expectations and hosed down its near-term guidance.

The company claims market share gains? Duh. DHL's retreating means everyone is likely gaining market share. The sorry quarterly report is actually more troubling knowing that FedEx is fading even as it gains market share.

The company feels that it may have hit bottom? I doubt it. If it did, it wouldn't be lowering its fourth-quarter outlook.

When Corporate America bounces back, are we still going to be relying on physical documents and parcels the way we used to? Sleep on it, and see if your optimism survives the overnight delivery.

5. Another solar eclipse
Solar energy stocks were rays of sunshine for eco-friendly investors until last year. Now it seems as if "the sun will come out tomorrow" is on an infinite loop.

Energy Conversion Devices (Nasdaq: ENER  ) became the latest solar play to go supernova. The company warned that it would miss its fiscal third-quarter revenue targets. It also announced a corporate restructuring and an expansion slowdown.

It's easy to see why the market has cooled on solar energy. Cash-strapped countries, consumers, and corporations aren't likely to bankroll costly migrations to the platform. Photovoltaic cells are also a hard sell now that traditional energy prices are in check.

That could all change, of course. Investors shouldn't entirely dismiss the sector. However, until there are signs of life from the industry, it's hard to justify holding many of its stocks.

Let's beat the dumb drum:

Google is a Motley Fool Rule Breakers recommendation. Amazon.com and FedEx are Motley Fool Stock Advisor selections. Try any of our Foolish newsletters today, free for 30 days.

Longtime Fool contributor Rick Munarriz is a fan of dumb and smart business moves. Investors can learn plenty from both. Hdoes not own shares in any of the stocks in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.


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  • Report this Comment On March 20, 2009, at 4:00 PM, imalost wrote:

    Amazon is a scam stock, notice all the negative news and the stock did go down at all. Highly manipulated stock. PE of 50 PEG of 2 and 10 times book value, this stock is acting as if the tech bauble days are back.

  • Report this Comment On March 20, 2009, at 6:43 PM, imalost wrote:

    Can you Amazon is horrifically overvalued

    EPS 1.493

    EPS Est. Current Year1.480

    EPS Est. Next Year1.910

    EPS Est. Next Quarter0.290

    Book Value (p.s.)6.243

    PEG Ratio 2.11

    Profit Margin 3.37

    Operating Margin 4.12

    Return on Assets (ttm) 6.7

    Return on Equity (ttm) 33.3

    Qtrly Rev. Growth 18.2

    Gross Profit (p.s.)9.963

    Sales Per Share44.729

    EBITDA (p.s.)2.520

    Qtrly Earnings Growth 8.70

    Operating Cash Flow (M) 1700.00

    Levered Free Cash Flow (M) 942.75

    Valuation

    P/E 46.86

    P/E Growth Rati

    P/BV 11.21

    P/S 1.56

    P/CF 17.64

    Dividend Yield 0

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