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This Week's 5 Dumbest Stock Moves

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. Goo gull
The world's leading search engine isn't doing as well as analysts expected. Google (NASDAQ: GOOG  ) (NASDAQ: GOOGL  ) fell short of Wall Street's revenue and profit targets. Some may argue that Google itself didn't miss, as it doesn't provide guidance, but the market prices the shares based on those projections.

The good news is that Google came through with a 26% spike in the volume of paid clicks. Unfortunately, the average price paid per click fell 9%. This isn't anything to be worried about. Price per click has declined for 10 quarters in a row. Mobile continues to gain share of Google's overall search queries, and that traffic remains less lucrative than PC usage.

2. Is it best to say goodbye?
Best Buy  (NYSE: BBY  )  went from being a market darling in 2013, soaring 237%, to becoming one of this year's biggest large-cap losers, shedding 39% of its value year to date. Things continue to get worse for Best Buy. Shawn Score, the chain's president of U.S. retail stores, announced his retirement this week. It's easy to be skeptical, and not just because he's only 48. The retirement is effective immediately, suggesting something unexpected. He has also been at the post for only seven months.

We now know that Best Buy's challenges are real. Last year's turnaround was a head fake. It isn't easy to be a consumer electronics retailer in an era of digital delivery for media and cheaper online prices for the hardware that makes the online ecosystems possible.  

3. Up in the air
Social-media nightmares don't get a whole lot worse than this: US Airways -- just months from completing its merger with American to form American Air Group -- found itself tweeting a graphically obscene photograph of a naked woman getting intimate with a model airplane in response to an irate passenger.

There could be a simple explanation for this. Maybe the social-media manager was copying the URL address of the vulgar snapshot -- which was originally posted to US Airways' Twitter feed by another Twitter user -- to pass it on to a superior or perhaps a friend. Then that person may have forgotten the last link he or she copied, and then subsequently pasted the lewd link, rather than a link to US Airways' online feedback page, in the ill-fated tweet.

US Airways says it will let the mishap slide, but it nonetheless made the airline the viral laughingstock of the week. 

4. Pop goes the housing bubble
St. Joe  (NYSE: JOE  )  was a big winner during the housing boom a decade ago, developing huge tracts of land in Florida. It retreated when the financial crisis hit, but now it's back with its hard hats.

St. Joe is submitting an application for its plans to develop a massive 110,000-acre area over the next 50 years. The development will feature residential communities marketed to active, retired adults, with town centers to keep commercial opportunities nearby. 

There's certainly nothing wrong with St. Joe cashing in on the huge amount of land it accumulated when it was a paper giant. The timing just seems to be off -- even for a 50-year development plan that will invariably go through various cycles -- given the recent spike in mortgage rates and signs that the residential real-estate market is cooling down.

5. Out of the blue
IBM  (NYSE: IBM  )  is feeling pretty mortal these days. The tech bellwether that once had no problem surpassing Wall Street expectations is struggling just to keep up. Adjusted earnings declined 15% to match the $2.54 per share that analysts targeted, and revenue came in weaker than the pros had projected, slipping by 4% for the period.

If the economy's improving, why did IBM just put in its lowest quarterly revenue growth in five years? It's not just a big drop in its systems and technology business. Even services checked in with a slight dip on the top line. IBM is putting the "blue" in Big Blue.

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  • Report this Comment On April 17, 2014, at 4:57 PM, GaryDMN wrote:

    Explain how this is not a long term trend: "This isn't anything to be worried about. Price per click has declined for 10 quarters in a row" - It appears their cash machine's output in diminishing and will continue to diminish. Google is very good at delivering hype and vaporware, but light on delivering profitable products.

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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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