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. Dressed to kill
Men's Wearhouse
(NYSE: TLRD  ) has a credibility problem. I guarantee it.

The suit retailer ousted founder George Zimmer this week. You know him. "You're going to like the way you look," he said at the end of the chain's ads. "I guarantee it."

High-profile founders get ousted from companies. It happens. However, the board's failure to explain the move -- leaving Zimmer to issue a statement claiming that he was fired as executive chairman because he disagreed with the board's direction for the retailer -- isn't going to make shoppers side with the Zimmer-less chain.

Retailers have to deal with finicky shoppers before offering up any drama, but now they're giving Zimmer fans a big reason to stay away.

Keep an eye on comps in the coming months.

2. Ebix comes undone
Ebix (NASDAQ: EBIX  ) shares tumbled on Thursday after a leveraged buyout deal to take the company private cratered in light of a U.S. criminal probe.

Goldman Sachs was heading up the $820 million deal to take the insurance industry software provider private, even though naysayers have been badmouthing Ebix's accounting practices for some time. The bears may have been right after all.

We don't know how the criminal probe will play out, but Goldman Sachs isn't going to stick around and risk any further embarrassment.

3. Shield your eyes
We've seen plenty of handheld gaming devices resort to drastic price cuts just weeks after their initial release, but now we have a system that's slashing its price days before it hits the market.

NVIDIA (NASDAQ: NVDA  ) is cutting the price of its handheld Android gaming device -- NVIDIA Shield -- by $50 to $299.

The price cut is a smart thing. I was skeptical about the gadget's chances at $349. Despite the slick five-inch HD display and powerful NVIDIA Tegra 4 processor, the machine was destined to flop at such a steep price.

"At the end of the day, NVIDIA Shield is an overpriced throwback gaming device with high-end features," I wrote earlier this year. "There is a market for that, but not much of a market."

However, even at $299 this is still a device that's going to struggle beyond a small core of die-hard gamers who don't mind paying more than existing handheld systems for a portable device that also plays Android apps, streams PC games, and doubles as a media player.

A flop will sting NVIDIA's rare consumer-facing salvo, and that will probably happen at most price points.

4. Watch this space
Jefferies analyst Peter Misek isn't keen on the needle-moving potential of Apple's (NASDAQ: AAPL  ) long-rumored smart watch.

Appearing on CNBC and issuing a hype-flattering note on Apple, Misek feels that the product at best would be a lower-margin niche product that only winds up selling about 6 million units a year. Generating $0.27 a share in earnings and $1 billion in revenue on an annual basis, it won't be the incremental game changer that Apple needs.

Projecting just a 5% market penetration rate of the 250 million iPhone users seems low, but this also misses the point of retention and attraction. If the iWatch is as innovative as many of Apple's other products have been in the past, it will attract new iPhone buyers as well as keep existing iPhone owners in the iOS ecosystem.

A smart watch is a smart move by Apple, and shooting it down before the consumer tech giant has a chance to prove itself doesn't seem so smart.

5. You've got to know when to FOLD 'em
Investing in biotech upstarts can be pretty risky, and Amicus Therapeutics (NASDAQ: FOLD  ) investors learned that the hard way this week.

Shares of Amicus fell 20% on Monday -- and by Thursday had closed at a fresh 52-week low -- after announcing that it will be delaying the process of seeking FDA approval for its Fabry disease drug.

An earlier clinical trial had shown that its potential treatment was not significantly more effective than a placebo in treating the rare genetic disorder. However, Amicus was still hoping to gain FDA approval.

Amicus now revealed that it won't be seeking stateside approval until the latter half of next year at the earliest. Impatient investors were bailing on the stock this week, taking its F-O-L-D ticker symbol seriously.

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  • Report this Comment On June 21, 2013, at 8:09 PM, jwtrotter wrote:

    Writers like this really have no clue what they are saying when they talk about the Shield game console+ from Nvidia. I really think a lot of naysayers will be eating crow soon over their statements. They also really don't understand the ecosystem being created by Nvidia, nor the real purpose of this new niche product. It won't be a flop . . it also isn't intended as a primary revenue driver. They won't be losing money on it and they are building on their reputation with this and other recent moves, not detracting.

  • Report this Comment On June 21, 2013, at 10:08 PM, TMFBreakerRick wrote:

    jwtrotter, I respect your disagreement, but how can a $50 price cut announced days before the release be seen as anything other than a sign of desperation. If pre-order demand was strong, clearly that would not happen.

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