This Week's 5 Dumbest Stock Moves

These five companies got it wrong this week.

Mar 28, 2014 at 4:48PM

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. King gets dethroned
King Digital Entertainment (NYSE:KING) went public with plenty of fanfare on Wednesday but ultimately had more fans than fares. The company behind Candy Crush Saga priced its IPO at $22.50, but the debut on Friday fell like many potential kings on Game of Thrones

King's problem wasn't just the Zynga-licious fears that burned investors of the last casual-gaming darling that fizzled out. Many of its performance metrics had dipped sequentially between the third and fourth quarters of last year, fueling fears that King's popularity had already peaked last summer. 

King needs to show either sequential growth in the current quarter or put out a second hit if it wants to avoid becoming another busted IPO in the future.

2. Rack 'em up 
Rackspace (NYSE:RAX) has closed lower in six of the past seven trading days, and it's not just the weak-kneed tech stocks fueling the slide. Tech giants are crashing its party with ridiculous cutthroat pricing.

The Web hosting provider has been a popular stock because of its healthy reputation providing traditional and cloud-based hosting, but it's hard to compete against the world's largest search company and the country's most popular e-commerce player moving to make their cloud-based solutions even cheaper. That's exactly what happened this week. 

3. Game off
The video game industry may have gotten a spark with November's rollout of the Xbox One and PS4, but the surge in low-margin hardware sales isn't translating into sales of higher-margin software and pre-owned wares at GameStop (NYSE:GME).

The video game retailer posted disappointed quarterly results on Thursday, missing Wall Street's profit target for the first time in ages. GameStop's forecast is also less than rosy. The small-box chain is eyeing a profit of $3.40 a share to $3.70 a share for the new fiscal year, shy of the $3.76 a share that the pros were projecting

GameStop shares nearly doubled last year on excitement surrounding the new consoles hitting the market, but now the stock has shed 24% of its value in 2014.

4. Seas the day
SeaWorld (NYSE:SEAS) would love to be generating attention for the "Sea of Surprises" celebration that it unveiled this week as all of its parks commemorate the original SeaWorld in San Diego opening 50 years ago, but now it has to deal with questions about why Blackstone is bailing again.

The firm that took SeaWorld public last year had sold 18 million shares just three months ago. Sluggish attendance and negative backlash surrounding last year's Blackfish documentary aren't helping, but it ultimately isn't a good thing if the investor that took you public is scrambling out of its controlling stake. 

5. There's no renaissance at this festival
Some companies just miss badly when it comes to living up to expectations. SFX Entertainment (NASDAQ:SFXE) tumbled 12% on Thursday after posting disappointing financial results

The music festival promoter posted a steep loss on $84.2 million in revenue for the quarter. Analysts were holding out for a small profit and $112.9 million in revenue. If you miss this badly on both ends of the income statement, it's not really a surprise to see the market turning down the volume.  

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Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Rackspace Hosting and owns shares of GameStop. 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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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