This Week's 5 Dumbest Stock Moves

Stupidity is contagious. It gets us all from time to time. Even respectable companies can catch it. As I do every week, let's take a look at five dumb financial events this week that may make your head spin.

1. They're holding the earnings report upside down
Shares of Netflix (Nasdaq: NFLX) were dealt a 13% bump to the head yesterday after posting mixed quarterly results -- but the market pummeled the wrong guy!

Investors were spooked by the drop in average revenue per subscriber, coupled with the pesky uptick in subscriber acquisition costs.

This is a two-ingredient recipe for disaster in most cases, but investors need to look deeper. The reason Mr. Market fears cheapskate customers and rising costs to land them is because it's a one-way ticket to Funky Margins City.

This didn't happen at Netflix at all. Revenue grew at a reasonable 27% clip, but net income charged 34% higher. The company's goal is to grow its subscriber base -- 15 million couch potatoes strong, and counting. Even if they are drawn to the lower-priced monthly plans with unlimited digital streaming, that clearly isn't inhibiting bottom-line growth.

Netflix knows what it's doing. Investors yesterday? Not so much.

2. An Apple a day keeps the logic away
If I'm going to rip into Mr. Market for taking Netflix down unfairly, I may as well shake my head at the rise in Apple (Nasdaq: AAPL) shares despite its ominous guidance.

Apple may have delivered yet another blowout quarter, but its outlook for the current quarter has been largely overlooked.

The iEverything company warned that earnings will clock in at roughly $3.44 a share -- well below analyst consensus. It pegs revenue at $18 billion, nicely ahead of where the pros were perched.

Now, it's easy to dismiss Apple's low-balling ways. The company has to stay one step ahead of analysts by cranking out bottom-line guidance that is two steps below where reality rests. It's the only way to keep landing ahead of them quarter after quarter. However, by jacking up its revenue goal, Apple is telegraphing that net margins are about to get smacked around a bit.

Between free bumper cases that Apple will have to send out, the lower margin iPads, and the recent admission that it costs more to make the iPhone 4 than the 3GS that retailed for the same price, investors may be in for a rude awakening on the margins front.

3. Today's grilling recipe: Place some Bratz on the Barbie
An appellate circuit court judge has tossed out a verdict that awarded Mattel (NYSE: MAT) the lucrative line of Bratz dolls. The doe-eyed playthings were introduced by MGA Entertainment, and the world's largest toy maker has argued that Bratz belongs to Mattel because the creator initially drew up the designs while still working for Mattel.

There's big money at stake, but the worst thing is that the ownership uncertainty will likely translate into half-hearted promotion of the dolls. Thankfully, Mattel may have its original star back. Barbie sales have started to bounce back, and it only helps that the generational doll and her boy toy Ken had primo roles in this summer's Toy Story 3.

I have no idea who will ultimately be awarded the franchise, but the raspberries here go to the court system that doesn't realize that the relentless flip-flopping on Bratz ownership is going to ultimately kill the brand.

4. Unlimited venom for limited data plans
Tech blog Engadget is hearing that Verizon (NYSE: VZ) will follow AT&T (NYSE: T) in eliminating its unlimited data plans for new customers as early as next week.

It may have seemed like little more than worrywart hearsay, since Verizon Wireless doesn't offer the data-slurping iPhone, but it's all starting to make sense. A Verizon executive later told Engadget that buyers of Motorola's (NYSE: MOT) Droid X -- the new Android device in Verizon's arsenal -- are consuming five times the data of traditional smartphone shoppers.

Verizon doesn't want to see its network become the next AT&T, so installing meters is the knee-jerk solution instead of simply building out a network.

The end of data buffets may not seem like a big deal, but keep in mind that smartphone makers, movie studios, online advertisers, and app developers were all counting on wireless customers that weren't sensitive to how much data they were consuming. This won't trip up the smartphone revolution, but it should slow it down.

5. Purple revenue eater
The market didn't warm up to Yahoo!'s (Nasdaq: YHOO) quarterly report this week, despite posting a healthy 53% spike in earnings. It's an impressive spurt, but shareholders gravitated to the $1.13 billion in revenue before traffic acquisition costs -- just shy of the $1.16 billion it rang up a year earlier.

How does this happen? How can an Internet company generate lower revenue than last year's recessionary depressed period? Revenue at its larger rival surged 24% during the same quarter.

Yahoo! has plenty of cash in the bank. It better use it to acquire shiny, pretty things because organic growth isn't cutting it.

Which of these five moves do you think is the dumbest? Share your thoughts in the comment box below.

Apple and Netflix are Motley Fool Stock Advisor recommendations. Try any of our Foolish newsletter services, free for 30 days. That certainly wouldn't be a dumb move.