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. Lost in translation
Some promotions are just doomed from the start. Coca-Cola (NYSE: KO  ) may have thought that it had a clever marketing stunt for its vitaminwater in Canada, pairing up a random English word with another one in French.

Well, that was before someone uncapped a bottle of the vitamin-stoked beverage to find "YOU RETARD" scribbled on the back of the cap.

It wasn't supposed to be offensive. Retard, in French, simply means late or delayed. However, the random pairing of the two words finds the beverage giant wondering how all of the combinations weren't vetted beforehand. I guess one can say that it was Coca-Cola that was late on this one.

2. Take a long walk off a short Pier
Shares of Pier 1 Imports (NYSE: PIR  ) tumbled 14% yesterday after posting a rare quarterly miss, hosing down its near-term outlook along the way.

The home furnishings retailer blames weak ad spending for the light sales, but that doesn't explain the shortfall on the bottom line. It then tried to make up for the soft traffic in July by discounting aggressively in August, but that doesn't explain the softer-than-expected sales growth.

Pier 1 is upbeat about its prospects over the holidays, but that doesn't explain the softer outlook.

When things don't add up stock prices fall.

3. Hello Larry
There was a prominent no-show at Oracle's (NYSE: ORCL  ) earnings call this week. CEO Larry Ellison wasn't there to tackle the hard questions, or take shots at the competition.

"Larry isn't with us today because he is at an important race for the America's Cup," Oracle's CFO explained.

CEOs have had spotty attendance at earnings calls in recent years, but it would have been good to have one around this time. Oracle missed revenue estimates, and the enterprise software giant's outlook wasn't very comforting.

At least one analyst took Oracle to task for not making the presentation.

"The call reflected a certain lack of direction, in our opinion, highlighted by CEO Larry Ellison's decision to skip the call to attend Races 11 and 12 of the America's Cup," laments JMP Securities analyst Pat Walravens.

4. Qihoo's your daddy?
Qihoo 360
(NYSE: QIHU  ) has to be kicking itself. The company behind the fast-growing search engine was rumored to be in talks to acquire Sogou, China's third largest platform. Qihoo would have combined for nearly a quarter of China's search market with the deal, making it a more viable player in the most lucrative online niche.

Well, those plans are on ice now that Internet gaming and chat giant Tencent has stepped in to invest $448 million for a 36.5% stake in Sogou that it can eventually build up to a 40% position.

Qihoo 360 had a chance to be more than a thorn in the side of the market leader, but now it will have to settle for that -- and that's if Tencent's exposure doesn't help Sogou grow at Qihoo 360's expense.

5. There's an app for that
Today's the day for Apple (NASDAQ: AAPL  ) , but the consumer tech giant doesn't make the cut in this week's list because of the weak preorders in China, or the lock screen hack that's already been unearthed.

No, Apple makes the cut here because of the market's misplaced expectations. 

Shares of Apple moved lower earlier in the week when it failed to disclose iPhone 5c preorders. Apple has historically announced the metric after the initial weekend. However, faulting Apple here isn't fair. Unlike previous preorder cycles, Apple isn't making the new iPhone 5s available to order ahead of time, so it's just as if Apple would have only made the iPhone 4S available as a preorder a year ago when the iPhone 5 came out.

The comparisons would have been incomplete. Apple didn't get this wrong. Wall Street, and the financial media, are the ones making the dumb move. 

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  • Report this Comment On September 21, 2013, at 4:12 AM, Clint35 wrote:

    What was Coke thinking? Not only were the words they chose on that cap terrible choices, but how does pairing an English word and a French word together get people to buy more Coke products? Have they forgotten how well advertising works? If they have to put something on the caps it should just be a simple thank you. Or a big thank you, plus an apology for overcharging them for simple tap water they could get at home.

  • Report this Comment On September 21, 2013, at 8:42 PM, DanManners wrote:

    Rick you are a breath of fresh air. You have been like the son i never wanted.

    Last year Apple sank 35 points in 3 days after they reported iPhone 5 sales were only 5 million which was a record. Investors are so scared of Apple tanking at any moment like Friday, they jump quickly. Apple can just go down down down. Sales this weekend will be 3-4 million according to some analysts.

    Now the stock went down $ 315 after last September. We can't go down that much as Apple would be around $ 155 by next year. They should have that much in cash when reporting next month. So that is the good news. Also, we are much lower than last year so much should be built into the price.

    But Tim Seymour on Fast Money yesterday recommended $ 440 as an entry point. At $ 440 or lower the stock really broken. Brian Kelly reminds us that a stock can stay broken for years. Apple will be between 300 and 500 pretty much for the foreseeable future.

    Large holders of the stock will keep dumping it. Often pushing the stock down many points in a very short time. This will make investors very uneasy. Also, the phones are nice and should sell but Tim Cook has shown himself to be difficult to shareholders. NO big phone, NO china Mobile deal, no TV, No watch. no new thing. It is always next year that we should see something. You know what? Nothing is coming.

    The new 5s is great but they needed two phone sizes to quell demands for a larger phone. Maybe next year mantra will prove true. But I doubt it because I am constantly disappointed. Cook needs more products to balance out the risk. As Cramer says on "Am I Diviersified" you need to do that so if one stock does poorly it doesn;t destroy your portfolio. Same holds true with Apple.

    Apple could have over $ 300 billion in cash by the end of 2015 as one analyst said and the stock could still be below 400. Expect it to drop big most of next week as we copy last years drop. CNBC and Bloomberg post how big Apple falls after a product release, announcement, earnings etc. Now we drop into those and after those events. Then we drop all year. The recent rally was manipulated with the help of Carl Icahn and analysts.

    Guy Adami said a week ago said Apple could retest the lows at 385 and could overshoot to 365. That is absurd but possible. Even with $ 39 earnings per share at 365 you have a 9 p/e. If you back out $ 100 billion in cash after taxes you are around 6.8 p/e. With a 3.3% dividend and buybacks of $ 50 billion or so. Expect bigger buybacks if Icahn convinces Cook to increase them next year. With $ 180 billion or more by next year, Apple has to do that. They won't be able to hold on to the cash without a shareholder riot. So 908 million shares would come down to 708 million shares if they spend $ 100 billion on buybacks (including money already allocated). That could put EPS at $ 51.30

    But with a 9 p/e we are still around 450. That is incredibly low but the stock should not drop lower. If Apple can keep making money and continue their buybacks, the stock would eventually have to start moving up. A p/e under 9 is just too lower for a company making so much cash.

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