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This Week's 5 Dumbest Stock Moves

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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. Too bad that analysts and speculators aren't private equity firms
Buyouts are usually bittersweet celebrations, but sometimes they're just bitter.

Deltek (Nasdaq: PROJ  ) revealed on Monday that it was being acquired by a private equity firm in a $1.1 billion deal that would take out shareholders at $13 a share.

The rub is that the stock had closed out the week earlier just above $14. Ouch!

The $13 price may come as a bit of a shock to the summertime speculators. JMP Securities even upgraded its price target -- from $12 to $16 -- on the shares earlier this month. Wasn't the stock only at $12.32 six weeks ago when the enterprise software and information solutions provider revealed that it was putting itself up for sale?

Unfortunately, sometimes speculators and analysts have a higher opinion of a stock's worth than what the folks writing the checks are willing to pay.

2. Volt of lightning
General Motors (NYSE: GM  ) keeps overestimating the number of Chevy Volts that it can sell.

The automaker is once again suspending production of its plug-in Volt. A four-week lull at the Michigan plant making Chevy's revolutionary car follows a similar suspension earlier this year and a prolonged holiday stoppage that bled into early this year.

Why isn't the Volt selling? Yes, the price is high even after a tax rebate. However, the unique features of the car that combines an electric battery good for roughly 40 miles between charges and a small gas tank that kicks in when the juice runs dry should be easy enough to market.

It's not customer satisfaction. My wife bought a Volt earlier this year. She loves it.

Something is just wrong with both GM's marketing strategy and its sales forecasting ability. Given the recent spike in gas prices -- something that should be a magical elixir for Volt sales -- the failure on both fronts is even more telling.

3. Baidu plays hardball
Baidu (Nasdaq: BIDU  ) surrendered roughly $6 billion in value last week on reports that the company behind China's leading Internet browser was gaining market share in search at Baidu's expense.

Baidu's response this week has been to send search queries generated from third-party browsers to its own home page.

It may seem to be a shrewd move to bring folks back, but won't this ultimately discourage users from going with Baidu as their search engine of choice on other browsers?

4. Live and let Dycom
Dycom Industries (NYSE: DY  ) didn't hold up so well in its latest quarter.

The provider of engineering, construction, and other industrial services to the telecom, cable, and utility industries was working on a streak of five consecutive quarters of better-than-expected profitability, but then Tuesday happened.

Dycom's financial results show that contract revenues climbed 5% to $318 million, well short of the $323.7 million that the pros were targeting. Dycom's net income of $0.39 a share also missed Wall Street's forecast calling for a profit of $0.41 a share.

When you miss on the top and bottom line, it's easy to imagine the market's reaction.

5. Perfect World births an imperfect world
Perfect World
(Nasdaq: PWRD  ) continues to be a laggard in China.

The online gaming specialist disappointed the market with this week's quarterly report.

Perfect World's revenue retreated 13%, and its net income was cut in half. There's no relief in sight in the near term. Perfect World's guidance -- at the midpoint of its new forecast -- is calling for yet another sequential and year-over-year decline in revenue.

If all of China's online gaming companies were struggling, Perfect World could point to country-specific trends. However, many of Perfect World's rivals are still growing. There's a company-specific issue holding Perfect World back.

Get smart
Don't be a dumb investor. Check out the three stocks leading a new industrial revolution in this country. Sure, it's a free report. Check it out before it's gone.

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The Motley Fool owns shares of Motley Fool newsletter services have recommended buying shares of and General Motors. 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.

Longtime Fool contributor Rick Munarriz calls them as he sees them. He does 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.

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Related Tickers

10/21/2016 4:00 PM
BIDU $176.76 Up +1.59 +0.91%
Baidu CAPS Rating: *****
DY $83.77 Down -1.04 -1.23%
Dycom Industries CAPS Rating: ***
GM $32.04 Up +0.29 +0.91%
General Motors CAPS Rating: ***
PROJ.DL $0.00 Down +0.00 +0.00%
Deltek CAPS Rating: No stars
PWRD.DL $0.00 Down +0.00 +0.00%
Perfect World CAPS Rating: ***