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Why MAKO Surgical Crashed

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of MAKO Surgical (Nasdaq: MAKO  ) crashed by as much as 41% today after the company reported preliminary sales figures for its second quarter.

So what: RIO system sales came in at just nine systems, following up its disappointing first quarter, which saw only six systems sold. There were a total of 2,590 MAKOplasty procedures performed during the quarter, which was a 66% increase over last year. The company also sold nine total hip arthroplasty applications.

Now what: MAKO has had a rough year so far, even when acknowledging the back-end-loaded nature of its business with most purchases usually taking place during the latter half of each year. CEO Maurice Ferre expressed optimism in long-term growth, but said the company's near-term focus will be improving execution. For the second consecutive quarter, MAKO has now slashed full-year RIO system sales guidance and now expects to sell only 42 to 48 systems this year.

Interested in more info on MAKO Surgical? Add it to your watchlist by clicking here.

Fool contributor Evan Niu owns shares of MAKO Surgical, but he holds no other position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of MAKO Surgical. Motley Fool newsletter services have recommended buying shares of MAKO Surgical. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Read/Post Comments (9) | Recommend This Article (10)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 10, 2012, at 3:29 PM, Moye100 wrote:

    Everyone got sucked into these. The shorts are in control. Is it going to zero? Maybe.

  • Report this Comment On July 10, 2012, at 3:30 PM, Moye100 wrote:

    They need to tell people it is going to zero.

  • Report this Comment On July 10, 2012, at 7:00 PM, GoNuke wrote:

    Another Rule Breaker tanks. Still hurting from Green Mountain Coffee Roasters collapse.

  • Report this Comment On July 10, 2012, at 11:34 PM, Len613 wrote:

    With MAKO down from over 40 to 14, at about the 2010 high, it would appear it has amplly discounted the news. But I thought so a week ago when I bought 1000@ 25.5.

    The problems are that: 1. Unlike other Fool real growth stocks MAKO has had a string of quarterly deficits as far back as the eye can see. 2. It was trading at 40 on smoke and mirrors in the first place; on prospects of up-up-up growth.

    Reality intervened.

    OTOH, it is certainly a better speculation now than it has been in a couple of years; being closer to a bottom of sorts --- provided it does not go into a RIMM-kind of death spiral and end up around 4, more or less.

  • Report this Comment On July 10, 2012, at 11:41 PM, CrazyToes wrote:

    MAKO has been a total flop of a stock in the past year. And their earnings sort of helped the downward spiral. I think it has more ways to go down before climbing back up.

  • Report this Comment On July 11, 2012, at 12:01 AM, ravens9111 wrote:

    Anyone remember HNSN? Where is that one now?

  • Report this Comment On July 11, 2012, at 12:49 AM, MFUN4 wrote:

    My question at this point is: what do I do with my current shares? Is it worth keeping in the hopes of recovery? I welcome your wisdom.

  • Report this Comment On July 11, 2012, at 10:14 AM, biju77 wrote:

    Although many fools expressed optimism last

    quarter, and looked at comparisons with Intuitive

    Surgical, they neglected a glaring warning sign -

    not a single Rio system sold ! MAKO is going to be

    wading in troubled waters for quite sometime.

  • Report this Comment On July 11, 2012, at 7:27 PM, Czekmayt wrote:

    A Reply to MFUN4 - I can't say I am able to give you with the "best" advice (given that you have not provided any information about you, your portfolio, % holding in MAKO, or your trading style) but given the desperation sensed in your question. I have a few thoughts and suggestions.

    Clearly the time to properly sell has passed. You did not have a stop order or effective way to exit the stock if the trade did not go your way. That is a hard lesson to learn. So the sooner - the better!

    I am guessing you are a new trader. Anyone who has traded has made this mistake, several times, so don't be overly discouraged. Welcome to the club. But you must have a trade plan that includes Risk Management. Learn what that means and you will (almost) never have to ask this question again. Proper risk management takes gambling out of your trades.

    If you can now forgive yourself and the money you just lost, do it. I hope all your money was not in at $25 or from $40. Waiting 6, 12, 18 or more months to hopefully get your money back is a waste of time. Hope is not a method in trading. If you properly buy, protect and sell to claim profits you will be a trader.

    The best question to ask yourself now is... of all the stocks there are to buy, is MAKO the one that you would buy now? Obviously the answer should be no. Therefore selling makes a lot of sense. If not tomorrow morning, then soon, wait for a little bounce. It could happen. But don't forget your stop order NOW, to protect yourself from further losses.

    Learn technical analysis, technical trading methods (and RULES) and understand fundamentals before risking capital or you won't be trading very long. Education is the only road to success. Make your own educated decisions so you won't be a victim. Find a trading buddy, bounce your ideas off them, accept criticism to your method and strive to improve with each trade.

    If you enjoy it, learn to do it properly.

    I wish you success.

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MAKO.DL $0.00 Down +0.00 +0.00%
MAKO Surgical CAPS Rating: ****