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 this week that may make your head spin.

1. Gnome on the range
Expedia
(NASDAQ: EXPE  ) opened sharply lower on Friday after falling short in its latest quarter.

The online travel portal saw adjusted earnings decline from $0.76 a share to $0.64 a share. Wall Street pros were banking on bottom-line improvement. Revenue did climb 16% to $1.2 billion, but that too was just shy of where analysts were perched on the runway.

A spike in marketing and technology costs led to the leaner net margins as Expedia is spending more to stand out.

Analysts fear that cutthroat competition will weigh on Expedia's plans to take off at this point. Piper Jaffray, Cantor Fitzgerald, and Benchmark all lowered their price targets on Expedia. 

2. Dell thinks outside of the coffin box
For the second time in as many weeks, Dell  (UNKNOWN: DELL.DL  ) is delaying the vote to take the struggling PC maker private.

Pushing the vote from Wednesday of this week to Friday of next week is yet another sign that it can't seem to get the required majority of investors behind the deal. Failing to close would be hazardous to Dell, possibly dropping the shares back into the single digits given the company's financial struggles.

However, Dell made things even worse this week by blinking. Michael Dell and his private equity partner in the bid to take the company he founded private are increasing their bid by a mere $0.10 a share to $13.75 a share in cash.

When did this turn into a negotiation? Won't this simply encourage the investors who haven't voted in favor of the deal to hold out for even more? Even with the nervous potential buyers arguing that this is the final offer, it will be hard to believe that they will walk away now that the folks holding back from voting feel that negotiating a higher price is taking place in public.

3. Zynga's a zinger again
The rare investor excitement that Zynga  (NASDAQ: ZNGA  ) temporarily generated after landing Xbox boss Don Mattrick to be its new CEO a few weeks ago evaporated on Thursday afternoon.

Zynga offered up uninspiring guidance, warning investors to expect a few quarters of volatility as it tweaks its business plan.

Zynga also didn't do itself any favors by revealing that it has all but given up on pursuing stateside opportunities for real-money wagering. Actual gambling was seen by many as a way for the struggling social and casual games giant to overcome weak bookings in its flagship gaming business.

4. Crocs of ages
Crocs
  (NASDAQ: CROX  ) as a turnaround story is starting to lose its footing.

The maker of resin footwear saw its shares tumble 20% on Thursday after watching earnings fall 43%. Earnings of $0.48 a share came up woefully short in light of the $0.64 a share that analysts were targeting.

Crocs had beaten Wall Street profit projections in the two previous quarters, and its new shoe lines that look nothing like the original Crocs seemed promising. However, with weakness in the U.S. and Europe, Crocs needs to restore its credibility with investors again.

5. These genes just don't fit anymore
Sequenom  (NASDAQ: SQNM  ) plunged 30% on Thursday after posting a larger quarterly loss than Wall Street was expecting and striking a cautious tone about its near-term prospects.

Sequenom is pointing to a temporary Medicare reimbursement issue as the reason for the genetics testing specialist to be cutting costs and backing away from some services, but the market's never entirely sold on negative circumstances at any company being merely temporary. 

Analysts at William Blair and Ladenburg Thalmann downgraded the stock on the report, and Maxim Group lowered its price target.

Get smart
With so much of the financial industry getting bad press these days, it may be a "be greedy when others are fearful" moment. Not surprisingly, some of Warren Buffett's biggest investments are in the space. In the Motley Fool's free report "The Stocks Only the Smartest Investors Are Buying," you can learn about a small, under-the-radar bank that's too tiny for Buffett's billions. Too bad, because it has better operating metrics than his favorites. Just click here to keep reading.


Read/Post Comments (1) | Recommend This Article (4)

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 27, 2013, at 9:27 AM, davaidesign wrote:

    How is missing earnings a dumb move? Writing about missing earnings being a dumb move is a dumb move.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2562021, ~/Articles/ArticleHandler.aspx, 8/23/2014 7:41:45 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement