This Week's 5 Dumbest Stock Moves

These five companies got it wrong this week.

Jan 17, 2014 at 4:45PM

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. SodaStream loses its flavor
The home carbonation revolution is running low on gas. Shares of SodaStream (NASDAQ:SODA) were slammed after the company warned that its holiday quarter didn't live up to earlier expectations.

Revenue moved a reasonable 26% higher during the period, just below SodaStream's previous outlook. However, the company now expects to barely break even on its bottom line. That's pretty shocking, given the healthy top-line growth, suggesting that sales of higher-margin syrup bottles and CO2 refills have been soft.

SodaStream had already disappointed investors during the third quarter when it posted a surprising stateside decline in flavor unit sales. It seems that wasn't merely a fluke.

2. Penney arcane 
Things aren't getting any easier for J.C. Penney (NYSE:JCP)

The struggling department store chain will be closing 33 stores. This may be just 3% of its total store base, but eliminating 2,000 positions in the process isn't something to scoff at.

J.C. Penney expects to realize $65 million in annualized savings as the result of closing these underperforming stores, but you don't see too many success stories among retailers that start shuttering locations. We've seen how this ends far too many times.  

3. GameStop hits the "pause" button
 (NYSE:GME) sold a ton of Xbox One and PS4 consoles, but that wasn't enough to save it from declining profitability over the holidays.

GameStop announced this week that while hardware sales nearly doubled during the holiday shopping season, new software sales plunged 22.5%. That's pretty big, considering the lean margins on hardware and the more bountiful markups on games. 

Owners of older systems aren't buying games that won't be compatible with the new Xbox and PlayStation platforms, and those who shelled out $500 for the Xbox One or $400 for the PS4 aren't spending much on disc-based purchases. 

GameStop now expects to earn between $1.85 a share and $1.95 a share in the holiday quarter. It earned $2.16 a share during the prior holiday quarter, and back in November its outlook was calling for a profit to clock of between $1.97 a share and $2.14 a share. The game is slipping from GameStop's hands.

4. Even Google Maps gets it wrong sometimes
Google (NASDAQ:GOOGL) let an anonymous Google Maps update request get by a moderator, and naturally the search giant regrets the temporary renaming of Theodor Heuss Platz in Berlin to Adolf Hitler Square. 

The park was named after the Nazi dictator in 1933, but that name was quickly scrapped after World War II. Google quickly fixed the oversight, but you know how it is when you mess up online. Blunders live on forever.

5. Best Bye
It was a disappointing holiday shopping season for Best Buy (NYSE:BBY), sending the stock sharply lower on Thursday. Comps clocked in slightly negative, and the promotional nature of the superstore chain's pricing activity suggests that the bottom line will look ugly.

"Best Buy is on this journey and in this business to win, acquire, and retain new and existing customers," founder Richard Schulze said in a statement minutes after the warning, implying that winning customers at the expense of near-term margins is important.

Investors should have seen this coming. A smaller rival posted cascading comps for its consumer electronics, PC, and wireless categories last week. We also saw GameStop -- as noted earlier in this column -- warn that there was a brutal margin crunch in the video game console industry, given the product mix for the period.

Best Buy investors weren't going to be spared the carnage. 

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Longtime Fool contributor Rick Munarriz owns shares of SodaStream. The Motley Fool recommends Google and SodaStream. The Motley Fool owns shares of GameStop, Google, and SodaStream. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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