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SodaStream International Ltd. Message Board

  • goldenseth goldenseth Feb 11, 2014 7:02 AM Flag

    Block out the Noise

    SodaStream fundamentals remain in tact although profitability remains a question due to the weakened consumer. GMCR showed the very same problem during the holiday season when they reported earnings, the need to discount machines. They sold the average Keurig brewer $12 cheaper in the quarter due to a weakened consumer and showed their smallest rate of margin expansion all year while missing sales expectations.

    SodaStream, regardless of partnerships will continue to struggle in a weak consumer environment. Something is going on in Japan & they are likely spending a good deal of money there, possibly positioning to by the distribution rights. India is likely to come very soon as all 4 key execs are in place to launch sales shortly. New refilling stations are set to launch in the U.S. and soon in Japan. These two refilling stations will help offset some margin pressure, but not eliminate margin pressure.

    V8 flavors will be out shortly, very shortly. Cooking Light flavors are now available at Wegmans and Happy Hour flavors recently launched at BBBY. Stainless Steel bottles are coming soon and Vanilla Cola.

    Regardless of KO/GMCR, soda still has a lot of headwinds regarding the consumer, so do retailers and all consumer good companies. Main priority is to keep getting machines out there and into the consumers' hands, regardless of cost. Razor blades will eventually produce the profitability desired longer term. That's the way the business model works.

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    • oh shut the fk up sethy. your credibility is nothing. have you no sense of worth,? An, you post here again. at least i have a rhyme or reason. you, just have just your emotions. Which have proved to be second rate at best.

    • I don't know if I follow you on this. Fundamentals remain intact but profitability is in question? Profitability generally goes hand in had with fundamentals. Although I think this is really just an issue of semantics. I also thought your usage of "operating leverage" was odd below. Operating leverage refers to the extent of margin expansion or contraction with revenue growth or decline.

      Regardless, I agree with you the trading has been massive overreactions. Have had a few good trades on these swings, but got burned pretty badly by the pre announce. Have to shrug it off in the long run though. GMCR management put shareholders through way more pain than was necessary too, but for anybody who had the liquidity it was an opportunity of a lifetime. I have been a long time supported of GMCR, but it looks expensive to me now. Soda looks cheap. It is like when GMCR fell 25% on SBUX announcing the Verismo… People are getting twisted into knots over nothing. When the model actually breaks I will be the first to admit it. GMCR and KO have their work cut out for them way more than the market seems to be acknowledging.

    • I have been told by a friend traveling in India that he saw Sodastream commercials on TV there.

    • johnlastnameq Feb 11, 2014 7:42 AM Flag

      Thanks for the lucidity Seth! When do you think the consumer will strengthen to offset the margins declining so much?

      • 3 Replies to johnlastnameq
      • When will the consumer strengthen? Come on. The consumer is getting crushed. Wages have been flat or down for decades. Which is why you buy stocks that can offer better value propositions.

      • I don't foresee a strengthening consumer without additional Fed stimulus. Financial dysfunction in the U.S. is structural in nature and while it likely can't be fixed with stimulus as practiced to date, it can certainly postpone impact on the institution as a whole. With that said, SodaStream's business model is one in which they are required to sell more and more machines until the consumables part of the business is large enough to support profitability and forward looking R&D of the business which will also support future profitability.

        SodaStream doesn't have operating leverage right now, none for which is substantial enough to offset consumer-related challenges such as those they are experiencing right now. What they have is longer term investment leverage such as that being employed in developing the new factory, buying distribution rights, launching and operating new refilling stations around the globe. These investments should all help leverage profitability, but not in the near term. New pipelines will be another contributing factor to profitability this year, but again, post new pipeline builds you will have the operating impact of those pipeline builds. SodaStream has always been a long-term story and if you believe in that story good for you. If not, don't give it a second thought as there are plenty of stocks in the market's seas.

      • It's a LAND GRAB!!!.... Profits will be put back into Marketing. The MARKET may start looking at Sodastream in a MARKET PENETRATION value.

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