With SodaStream (NASDAQ:SODA) stock severely off its 52-week and all-time high and now hovering back around its 2010 IPO price of $20, it might seem tempting to employ a buy-low strategy and try to grab what seems like a bargain. SodaStream recently disappointed with earnings and guidance mostly because of weakness in America, but the international company's sales weren't off that much. However, a closer look at the situation may warrant even more caution than the overall numbers suggest.

Source: SodaStream.

Third-quarter results that lost their fizz
The company reported third-quarter results on Oct. 29. Revenue fell 13% to $125.9 million. Net income plunged 42% to $9.5 million, or $0.45 per diluted share. CEO Daniel Birnbaum stated, "Our third quarter performance was pressured by challenging selling conditions for soda makers and flavors primarily in the U.S."

As a result, the company lowered its full-year guidance from an increase in sales of 5% to a decrease of 9%. Likewise, net income outlook was lowered from an decrease of 5% to a decrease of 42%. What a difference three months can make.

After seven years of double-digit revenue growth, the trend has stopped and is starting to reverse. The company mentioned in its growth plan issued on Oct. 29: "In the U.S. market, our acquisition rate of new users has dramatically slowed down but usage rates continue to be strong." Sales of starter kit units in the U.S. dove 60%. Even areas outside of the U.S. are starting to grow at lower rates than in previous years.

SodaStream's plan is to go after the "water plus" and health & wellness beverage markets. This includes soda or sparkling water and flavors made with natural ingredients, low sugar, and no artificial sweeteners while adapting the marketing accordingly. For example, the flavor bottles resembled a laundry detergent bottle and are being redesigned as a fountain beverage bottle.

Too little too late?
I applaud SodaStream for its reactionary plans, but these types of things should have been done proactively. Attempting to reinvent itself this late in the game should help, but the damage is deep, and the downward momentum will be tough to overcome. The worst part of the quarterly results isn't even the drop in overall sales, but specifically the drop in soda maker start kits.

You may have heard of successful business models that employ the razor and blade model. The theory is that if you can sell the customer the razor, he will come back to buy razor blades and supply you with a recurring revenue stream. The SodaStream model works similarly.

The problem with SodaStream is that it stopped selling "razors," or starter kits, at the brisk pace of the past, which will inevitably lead to weak "blades," or syrup and CO2 consumable sales down the road. For the third quarter, sales of soda maker starter kits plunged 33.6% to $41.5 million. Consumables did manage to rise 3% on the back of past starter kit sales.

As some people inevitably give up using the starter kits, or they are given as gifts to people who end up not using them, consumable sales will start to drop off, so it's vital for SodaStream to continually sell new kits. This metric is most important for growth in the long term. In the year-ago period, kits were 45% of overall sales. For the most recent period, kits were down to 36% of sales. In the U.S. specifically, kit volumes plunged by 60%.

Call me a cynic, but I have a hard time believing the 60% drop in the U.S. for the company's soda makers was a sudden and massive nosedive away from artificial and sugary drinks in just one quarter. Ironically, the still-somewhat-strong consumable sales numbers give evidence that current users are still reasonably happy with their makers and not suddenly giving them up for health reasons. Something else is going on, it could be the beginning of a fad dying, or a goof-up in marketing, but whatever it is, I wouldn't want to be invested in the stock, waiting to find out.