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Why Yelp, Vitamin Shoppe, and SodaStream International Slumped Today

By Dan Caplinger - May 10, 2017 at 4:24PM

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These stocks fell on a mixed day on Wall Street. Find out why.

The stock market was generally mixed on Wednesday, with major benchmarks moving in different directions depending on the specific performance of their individual components. A tough earnings day for major stocks in the Dow Jones Industrials weighed on that index, but the overall mood on Wall Street didn't lead to any big movements in either direction. However, some stocks posted particularly bad news, and that helped cause their stocks to decline sharply. Yelp ( YELP 0.29% ), Vitamin Shoppe ( VSI ), and SodaStream International ( SODA ) were among the worst performers on the day. Below, we'll look more closely at these stocks to tell you why they did so poorly.

Yelp needs help

Shares of Yelp finished down 18% after the online review specialist's guidance for the full year left investors unsatisfied. In Yelp's first-quarter financial report, the company said that revenue climbed by nearly 25%, and adjusted pre-tax operating earnings more than doubled from year-ago levels. Yet despite the impressive backward-looking performance, Yelp projected weaker results for the full year than it had previously expected, including a $30 million to $35 million cut in revenue expectations to a new range of $850 million to $865 million. The company said that accelerated growth last year created an echo effect of subsequent contract terminations. Despite assurances that those negative impacts will dissipate, growth-oriented investors worried about a potential deceleration in Yelp's expansion going forward.

Yelp logo.

Image source: Yelp.

Vitamin Shoppe needs a boost

Vitamin Shoppe stock plunged more than 30% in the wake of the company's first-quarter financial results. The nutritional products specialist said that net sales fell 6% from year-ago levels, and that led to a 45% decline in adjusted earnings per share. CEO Colin Watts attributed weak performance to poor comparable sales, which fell 6.3% in the quarter, as well as ongoing challenges with the company's Nutri-Force business. With the need for heavy promotional activity in the nutritional retail space rising, Vitamin Shoppe has had to double down on its attempts to cut costs and work on internal efforts to boost retention and customer loyalty. With an outlook that includes continued negative comps throughout 2017, it'll take time for Vitamin Shoppe to make good on all of its hopes for the future.

SodaStream fizzles out

Finally, shares of SodaStream dropped 7%. The maker of home carbonation systems said that its revenue climbed 14% in the first quarter, with net income rising more than 140% and earnings per share more than doubling from year-ago levels. The strong results pointed to the success of SodaStream's strategic shift to move away from making flavored soda and instead emphasizing the health benefits of sparkling water, which one can make using SodaStream devices without the need for further flavoring. One concern that some investors have is that part of SodaStream's profit can come from selling flavorings, and the strategic shift potentially reduces that income. However, with carbonation cartridges also providing recurring revenue, SodaStream hopes that soaring demand for its carbonators will lead to ongoing sales of related products well into the future.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

SodaStream International Ltd. Stock Quote
SodaStream International Ltd.
Yelp Inc. Stock Quote
Yelp Inc.
$37.38 (0.29%) $0.11
Vitamin Shoppe, Inc. Stock Quote
Vitamin Shoppe, Inc.

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