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. Whole in the head
Organic food items are gaining in popularity, but not fast enough to satisfy Whole Foods Market's (NASDAQ: WFM  ) own forecasts. The leading grocer specializing in organic and natural products plunged after posting a weak quarterly report and slashing its 2014 guidance for the third time. 

Yes, three times. And it's only May!

Whole Foods originally projected sales to climb by as much as 14% this year. A few revisions later, we're down to a target of 10.5% to 11% in top-line growth for 2014. 

There may not be an alarming sense of panic here. Sales, earnings, and same-store sales all rose during the period, and even the hosed-down outlook still calls for double-digit sales growth. However, investors didn't bid up Whole Foods Market to the point where it trades at a fat premium to traditional grocers to watch it fail to live up to expectations.  

2. Gone in a flash
It was also a rough report taking down shares of Groupon (NASDAQ: GRPN  ) . The daily deals leader did hold up well in its latest quarter relative to expectations, but investors weren't open to forgiving Groupon for its weak outlook.  

The provider of flash sales on local experiences and clearance merchandise sees itself clocking in with revenue of $725 million to $775 million for the current quarter. At the midpoint, it would be short of analyst estimates and less than it generated a year earlier.

At least one analyst -- Northland Securities -- lowered its rating on the stock, slashing its price target in half. Goldman Sachs, Wunderlich, and Evercore Partners stuck to their ratings, but all three joined Northland in lowering their price targets. 

3. The international language of misdirection
Shares of Rosetta Stone (NYSE: RST  ) tumbled 10% on Thursday after offering up uninspiring quarterly results. The language learning specialist was quick to point out that, excluding its shuttered kiosk business, total bookings would have grown 6% to $61.2 million despite a decline in North America. Revenue would have fallen just 1% -- and not the reported 5% drop -- to $60.8 million on a similar basis.

That's fine. It's not an apples-to-apples comparison if we take Rosetta Stone to task for a domestic kiosk channel that no longer exists. However, why not eliminate the acquisitions along the way to provide a more accurate apples-to-apples comparison of organic growth? Its adjusted results, after all, contain a little bit of padding from its Fit Brains acquisition in December that wasn't around during the prior year's quarter.  

4. Moving Target
Just when you thought that Target (NYSE: TGT  ) was getting over its massive holiday data breach, it makes waves by reminding everyone all about it. President and CEO Gregg Steinhafel resigned on Monday, clearly a casualty of the reputation-smashing incident that resulted in the breach that exposed 40 million credit and debit card accounts -- and eventually as many as 70 million customers -- over the holidays. 

It was bad, and Target could've done a better job of defending against the breach. It could have also responded sooner, limiting the extent of the information that was stolen. However, Target had already given the market a sacrificial scapegoat when its CIO stepped down two months ago. 

Just let it go, Target. The cheap chic retailer has a lot to do to restore faith in shoppers, but the resignation of its CEO six months after the breach isn't going to help make it go away any sooner.

5. King's game of throwing
Burger King  (NYSE: BKW  )  apparently has a novel strategy for the breakfast war: Let them eat burgers!

Burger Business is reporting that Burger King plans to start offering some of its signature hamburgers and chicken sandwiches during the morning -- as early as 9am -- to combat the increasingly competitive breakfast market. 

In theory, this would be a smart move. How many times have burger-seeking patrons hit a burger joint in the morning only to be told that they're still serving breakfast? However, at a time when chains are getting creative -- think Taco Bell's Waffle Taco -- is this really the best that Burger King can do? C'mon, BK. You're the King. You can do better than a Whopper at 9:14 in the morning.

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  • Report this Comment On May 09, 2014, at 8:35 PM, daisy001 wrote:

    A dummer move than all of them was when I bought Linkedin for nearly $180 on your recommendation.

  • Report this Comment On May 12, 2014, at 4:04 PM, TacAirlifter wrote:

    I actually jumped into Target (TGT) once it went down to $57/share. Already back up to $59.60 as of 4PM EST 12 May. Target has a pretty good setup, with limited debt, dividend yield, and aggressive growth into Canadian markets. The data breach is disturbing, don't get me wrong, but that's symptomatic of larger issues in the U.S. credit market. I wouldn't be surprised to see Target up above $60 by week's end.

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