Did SodaStream Finally Fizz Out?

Rumors that private investors are looking to take SodaStream private have caused waves in the market today.

Jul 24, 2014 at 3:07PM

According to a report from Bloomberg, SodaStream (NASDAQ:SODA) is in talks to go private. The report cites insiders and claims that a private equity firm is set to offer $40 a share for the fizz-your-own company. That would be about a 20% increase to the stock's current price, and would be the highest point for the stock in, well, about two months. SodaStream's up-and-down ride has been a source of endless frustration for investors who see the value of the business but who have yet to see that value translated into consistent success in the market.

Even if the shares were to hit $40, investors would still be out 20% since the start of the year. SodaStream has been beset by weakening sales and the threat of more competition. In summary, this might be a flat end to SodaStream's once sparkling future.

First mover advantage squandered
The news in February that Keurig Green Mountain (NASDAQ:GMCR) and Coke were teaming up put a damper on SodaStream's outlook. Much of SodaStream's appeal is in the huge discount that avid users can achieve over name-brand, prebottled product. Keurig teaming up with Coke to announce a "Coca-Cola Company-branded single-serve, pod-based" system meant that the advantage that SodaStream has could soon be slipping away.

Keurig popped -- its shares are up 60% on the year -- and SodaStream looked like it could be headed into the history books as an also-ran. If today's rumor is true, it may mean some life remains in the brand. Part of SodaStream's appeal for many investors is that it employs people in a politically and religiously contentious area (its main production facility is in a settlement of the occupied West Bank), bringing diverse people together. One of the downsides is that it's not the cheapest way to make things.

Keurig's operating margin was a healthy 23.6% last quarter, while SodaStream eked out an 11.5% margin. There are other operational concerns for cost, but part of going private may be a move away from higher-priced labor markets. The future of SodaStream's operations would depend heavily on who purchased the business and what the terms of the sale were.

Frustration for the market
Based on the reported bid, SodaStream clearly has some more to give. The suppressed share price was no doubt weighed down by the potential threat that Keurig posed to SodaStream. If the operational model were to change, or if the distribution were to encompass a wider audience, that competition could be less important.

For long-term investors in SodaStream, this is not great news. By making those changes itself, SodaStream could potentially unlock the value that a private bidder may see, and much more. The most vocal proponents of SodaStream often tout the value of the company's distribution network and the growth potential that having that network established produces. That's a long-term view that may have just been chopped off. For investors looking at the SodaStream of 2017, today's news could be a crushing blow. A small bump back to $40 is better than nothing, but you have to believe that even more is possible.

Leaked: Apple's next smart device (warning, it may shock you)
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

Andrew Marder has no position in any stocks mentioned. The Motley Fool recommends Apple, Coca-Cola, Keurig Green Mountain, and SodaStream. The Motley Fool owns shares of Apple and SodaStream and has the following options: long January 2016 $37 calls on Coca-Cola and short January 2016 $37 puts on Coca-Cola. 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.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers