Why SodaStream’s Stock Is Down 30% in 2014

SodaStream's stock is sinking, but there's reason to believe it can recapture some fizz.

Isaac Pino
Isaac Pino, CPA
Jul 1, 2014 at 1:00PM
Consumer Goods

The bold plans being made by Coca-Cola (NYSE:KO) and Keurig Green Mountain to invade the at-home carbonation market have likely intimidated many investors in SodaStream (NASDAQ:SODA)Some might even believe that the fresh competition has led to the more than 30% decline in SodaStream's stock price in 2014.

But the Keurig Cold has yet to be launched for consumers, and who knows whether the machine can even compete in this space. Instead, SodaStream's lackluster returns thus far this year were entirely driven by executive miscalculations made by management. If SodaStream can fix these mistakes and prevent future misfires, it still has a leg up in the industry. If not, investors should brace themselves for a rocky ride as everyone from Starbucks to PepsiCo creeps onto SodaStream's turf.

In the following video, Motley Fool senior consumer goods specialist Isaac Pino describes three particular pitfalls that have impeded SodaStream this year: inventory buildup, ineffective advertising, and slumping demand in the Americas market. From his perspective, SodaStream is grappling with the pains associated with rampant growth, which is understandable. As the beverage maker's CEO, Daniel Birnbaum, has pointed out, "[T]here's no textbook for launching the home soda category. ... We have to experiment, we have to make some mistakes."

But time is running out for SodaStream, and its supply chain issues need to be sorted out before Coke splashes onto the scene. In Isaac's opinion, a finely tuned carbonation exchange process coupled with the benefits of flavor customization are SodaStream's key differentiators. SodaStream must make sure customers are fully aware of how it can enhance their at-home beverage experience. It can't afford to miss another opportunity like this.