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This Week's 5 Dumbest Stock Moves

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Stupidity is contagious -- even respectable companies can catch it. As we do every week, let's take a look at five dumb financial events this week that may make your head spin.

1. Target practice
Target (NYSE: TGT  ) shoppers who may have dodged a bullet this holiday shopping season by not having their credit or debit card information exposed to hackers may still have to deal with angry gift recipients.

The discount department store chain revealed on Tuesday that less than 0.1% of the gift cards sold this season were not properly activated. Recipients of the cards are encouraged to check that they have a positive balance by calling the toll-free number on the back of the cards. Target will still honor the inactive cards that were sold.

That's a good thing, because it would be pretty embarrassing if one of every thousand cards sold were denied at the register, leading the recipient to think their friend or family member had cheated them out of a present.

It was going to be hard enough for Target to win back consumer confidence after the data breach, but now it could be even harder.

2. Sony may crack open Windows
(NYSE: SNE  ) may have a Windows Phone in the works, according to The Information. This would be a surprise for a couple of major reasons. The first, naturally, is that Windows Phones haven't been selling well outside of some Lumia models. Handset manufacturers have largely avoided paying Microsoft (NASDAQ: MSFT  ) directly for Windows, preferring to pay Mr. Softy indirectly by going through the global standard Android open source platform.

The second reason why this seems like a dumb move -- if true -- is that Sony's duking it out with Microsoft in the video game console market with the November rollouts of the PS4 and Xbox One. Why would Sony validate Microsoft? The smartphone could be out as soon as the middle of this year.

3. Netflix plays it cheap
(NASDAQ: NFLX  ) was a candidate for this week's column after a lot of popular movies and TV shows were booted from the service's digital catalog this week, but that's going to happen. Netflix signs new deals and lets others lapse.

However, Netflix cemented a slot here by offering some new users the option of a $6.99-per-month account. It only allows one user to stream at a time (unlike the $7.99-a-month plan that allows two family members to stream simultaneously), and it's only standard definition. This company has concerned investors in the past with its inability to increase average revenue per user, and now along comes a product that's even cheaper.

This may be good news for singles who don't have the bandwidth for high-def streaming, but why blur the value proposition at the expense of average revenue per user?

4. Hertz so good
(NYSE: HTZ  ) shares rose 10% on Tuesday after the company wheeled out a poison pill. The auto rental giant -- sensing unusual trading activity in its shares -- is going with a shareholder rights plan to prevent a hostile takeover.

I'm no fan of poison pills, and this is another example of why the market often gets it wrong by pushing these companies higher. The stock rose on the notion that someone may be interested in taking a controlling stake in Hertz, but the rental chain's move indicates that it will make things hard on any potential buyer. 

The rental market has been consolidating for years, and that will likely force any potential interested party to snap up a different player. Playing hard to get may work at the high-school dating level, but not at a corporate sock hop. 

5. Out of touch
You know it's bad when your CEO resigns to "pursue other interests," but the situation at UniPixel (NASDAQ: UNXL  ) got even worse 24 hours later when the COO also decided to bail on the company.

UniPixel offers touchscreen solutions for consumer and industrial applications, but the actions of two key execs just hours apart make it seem like it's out of touch.

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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 04, 2014, at 1:33 AM, DrGoldin wrote:

    Glad to hear that Target will honor the gift cards that they failed to activate! What would have been the alternative?

  • Report this Comment On January 04, 2014, at 9:56 AM, taloft wrote:

    ^^Monster class action lawsuit, lol. This is the last thing they need. Their P.R. people are going to be putting is some serious overtime this month.

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Rick Munarriz

Rick has been writing for Motley Fool since 1995 where he's a Consumer and Tech Stocks Specialist. Yes, that's a long time. He's been an analyst for Motley Fool Rule Breakers and a portfolio lead analyst for Motley Fool Supernova since each newsletter service's inception. He earned his BBA and MBA from the University of Miami, and he now lives a block from his alma mater.

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