Should You Sell SodaStream? 3 Reasons You Might Want To

In the video below, Motley Fool consumer goods analyst Austin Smith reveals three reasons investors might not want to go for SodaStream.

1. The product may be a fad in the U.S. and fizzle. Just because SodaStream is popular in Europe doesn't mean it'll be popular in the States. Sales of the company's CO2 cartridges will be a key barometer of its ongoing popularity.

2. The technology, while novel, is not revolutionary. Competitors could easily enter the market with their own soft drink carbonation products.

3. The CO2 cartridges need replacing and this could prove to be a hassle. Customers will need a convenient place to exchange their old cartridges for new ones, and right now, there are not a lot of places for consumers to do this. Rapidly expanding a supply network before American customers get frustrated will be important.

SodaStream's carbonation technology sounds simple, right? Well, this razor-and-blade company offers an intriguing opportunity for growth that may be harder to duplicate than you might think. Our premium report on SodaStream explains the opportunities as well as the risks in the company. The report comes with a year's worth of updates, so just click here to get started.


Read/Post Comments (8) | Recommend This Article (2)

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 January 27, 2013, at 11:42 PM, zangasya wrote:

    You ara real fools. Here is the link,compare it with SODA STREAM. www.examiner.com/.../gatorade-contains-flame-retardant

    Use of brominated vegetable oil in foods, like fruit-flavored sodas, has long been allowed by federal regulators, but consumers have raised ...See More

    Drink more of those drinks. Make shure your kids drink them too.

  • Report this Comment On January 27, 2013, at 11:46 PM, zangasya wrote:

    who are you anyway? Who needs your opinion? Shut up.

  • Report this Comment On January 28, 2013, at 8:24 AM, butboo wrote:

    This product is fantastic. I have many friends that own one and love it. I will be joining them soon. I am not sure why the Fool is do down on this company?

  • Report this Comment On January 28, 2013, at 9:11 AM, englishjames wrote:

    The fellows here are really stretching: Did geography stop Coke or Pepsi from profits? Carbonators hard to replace? No more harder than buying the soda maker in the first place: WalMarts,

    Staples etc are everywhere!! How did the fellas miss this? Duplicate soda makers? So who's going to knock Sodastream off its perch? Being the biggest and first does matter: I recall this being one of The Fool's primary tenets...This article doesn't even test the thesis...Very poor job guys...If you've no substantial backup, then lay low til you do...

  • Report this Comment On January 28, 2013, at 10:36 AM, disappointed666 wrote:

    You forgott he only reason that matters; because some fool at MF wants to use the system and drive the stock down. Thanks again Motley Screwall.

  • Report this Comment On January 28, 2013, at 11:26 AM, GodLeros wrote:

    1. We have a swing (at least by the knowledgeable) into eating healthier and refusing chemicals and animal products in our food.

    2. There are a LOT of non revolutionary products making money. Even Samsung is just copying off Apple. You are comparing this product to Coke.. Is THAT revolutionary?

    3. If they hold on to the CO2 cartridges it is STILL cheaper and healthier.

    Finally....

    "Competitors could easily enter the market with their own soft drink carbonation products."

    AND THEN

    "Well, this razor-and-blade company offers an intriguing opportunity for growth that may be harder to duplicate than you might think."

    Can ANYONE write articles on here?

  • Report this Comment On January 28, 2013, at 2:25 PM, pmagu wrote:

    Oh no, no, no! You are misreading this one. Sodastream is indeed a good story ; if the good numbers are scaring you, is because they have a product that strikes a nerve with the consumer.

    Those were three reasons why one wants to ‘cautiously’ invest into this story. And I say ‘cautiously’ because it has not been proven yet.

    Here is how I look at it.

    Home water carbonation devices and home-soda-and-energy-drink makers are about consumer empowerment. The frugal consumer maintains a healthy lifestyle while saving and in many cases, enhances it with more choices. Going to Wal-Mart once a month to buy the CO2 device is not as brutal as going to the supermarket weekly. Moreover, a family with kids that have fallen into hard times will save money. An energy drinker will have his drink for about 50 cents instead of $3. By the way, Sodastream’s choices of energy drink are far better in taste than drinks of the traditional competitors.

    Moreover, this product bodes well for some territories where CO2 is purchased to do the cooking (smaller and rural cities in Eutope, US, Brasil, Argentina, …)

    It is like having your personal Coke machine in your house. Except that the machine gives you more flavors, when you want that drink, at a far less price, and in an environmental friendlier manner. Now that is a fad.

    And the numbers are simply phenomenal as one would expect from a young upstart company. I will not bore you with the details you can look them up:

    Here are some of highlights with numbers that simply jump out at you: Sales are growing over 50% reflecting that are more distribution stores. Distribution agreements are aggressive. New territories with affluent and environmentally conscious consumers are opening up (in fact, sales doubled, if I am not mistaken) in Japan. EPS are growing at 60%. That is a forward PE of slightly under 19 at about $52/share. In other words, earnings are not even reflective of the growth that company is experiencing; And for the worrying type of personalities, Inventories are lean, they facility has expended (doubled the plant and equipment in 2011) and their Selling and Generanal Administrative Expense also doubled ( reflects additional people).

    The marketing is phenomenal. Those exhibitions that are put on major metropolitan cities in the US and around the world seem to be very effective. The lawsuit of Coke and UK’s refusal to air one of Sodastream’s ad backfired; it brought even more consumer attention (1 million plus views of the ad on youtube the week after.) Sodastream increasingly appears as the maverick that is not welcomed in the big boys club.

    The shorts are simply wrong on this one.

  • Report this Comment On January 28, 2013, at 4:37 PM, Awoodjr wrote:

    Your comments make no sense, unless you are shorting the stock. You are dead wrong, this thing is getting ready to blow. My stock broker recommended that I short this stock and I did. I then purchased a soda stream unit and was so impressed that I reversed my position. I'm glad I did.

    Get ready to cover.

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