As a premise, my opinion isnt worth any more than any of yours. Im not a professional trader and I make a lot of wrong decisions on stocks/options. However, I have to get something off of my chest. I understand the negatives with this company. Israel, possible fad, excess inventory, decline in starter kit sales, rising costs, etc., etc. However, this thing is way oversold. Sure...a stock can be oversold for a while. But during the last earnings call, the analysts gave the Mgmt every chance to guide lower the rest of the year, but Mgmt didnt take the bait. After a disappointing 2 quarters, if Mgmt thought they couldnt make estimates for the rest of the year, they wouldve told us then...imo. Why surprise us twice in a year, when they couldve just "beat a dead horse." On a valuation level, this company is way undervalued. They have a great business. They are having growing pains...big deal. Their refill business is huge, their Europe business is growing 'double digits' in a otherwise deflationary region, Asia is growing (Asia has a lot of people-btw, if you didnt know already), and in the US, our biggest retailer (Wal-mart) is giving them huge space. Their competitors are a long ways off from being HOME carbonators. If anything, the increased competition is going to HELP Soda by raising awareness of the industry. We are seeing partnerships by the big players (Coke, Pepsi, Starbucks) and there will be more. Soda had great distribution in other countries that companies would love to have access to. On a technical level, they are down 60% in the past 12 months and at the end of that decline, is a current stretch of 11 straight weeks of decline. Since they went public, there are 3 inflection points Im looking at. The 1st day of trading...11-3-10 (low of 23.15), 5-8-12 (low of 28.28), and 6-5-14 (low of 35.24). If you draw a straight line, they all connect. July, 2011 and June 2013 are the 2 tops in the formation. This is a classic double top. But...
And since the last 'inflection point on 6-5-14, the low of 35.24 was pierced in the last 3 weeks. That could be a bad sign. However, sometimes on the last point of resistance, its pierced sharply before switching directions and making a BIG opposite move. I think this stock will be moving BIG one way or the other based on all these technical observations. But with the underlying business strength, I find it hard to believe this stock would trade a lot lower. They have too much fundamental value to trade much lower...in my opinion, of course. Any good news will send this stock higher QUICKLY with about 30% short interest. Fundamentally this stock is ripe for value investors. And Technically, this stock is at long term inflection points. I feel like the bad news is already baked in...increased competition by EVERY big player, downward revisions, Israel entering war, lots of inventory. What else could this company say that would surprise us negatively? I cant really think of anything. But what if...we get good news...or a lack of bad news? Answer: a spike-up or a melt-up respectively. Either way, I see this going higher. And when a spike up occurs directly after a double-top formation, they can be HUGE...much higher than the 'top' highs...and quickly. This seems like its setting up perfectly. And the great thing is that options in this company are VERY cheap. You can afford to play both sides with options and potentially win big quickly. You obviously know which side Im playing. Good luck to everybody and happy trading. My prediction...the company reports better than expected earnings, and confirms guidance. There will be a big partnership/acquistion by the end of the year. This thing will be a "cult stock" trading in the 100's next year, possibly this year. Thanks for reading this book. haha
Enjoyed the Book! lol For my experiment another coworker is buying unit for her home based on the low sugar and 20% discount at BBB 9 out of 35 use the sodastream I put at work and 3 have got one at home
Everything you say makes sense, however:
Technical analysis, TA, is based on the natural process of people within the market place making day to day, minute to minute decisions on buying and selling stock. TA depends 100% on the emotional decisions of those traders. It does not rely on fundamental analysis whatsoever. I believe all TA experts will tell you that eventually all stocks will move towards a price based on fundamental valuation, P/E ratios, guidance etc.
TA also works much better with stocks that have gobs of shares to trade and trade heavily as opposed to stocks with fewer shares that trade thinly. Heavy trading allows the price to sway back and forth as emotional attitudes push it back and forth.
We know that a major announcement such as a buyout is not foretold by TA because it is assumed the market doesn't know or feel such a transaction in its moment to moment trades.
Look at SODA. It trades thinly. There are only 20 million shares and most are held by institutions. There is a huge short interest and that has been true for more than three years. So, we know there are very sophisticated traders with large interests, one way or the other, who each can dramatically affect a days action.
What I'm saying is that over the last three plus years that I have observed SODA trading, its trading hasn't followed typical TA patterns, for the most part.
Lastly, SODA is at a crossroads, IMO. Either the business plan works or it doesn't. The stock has tanked because lately, the last three quarters, there is reason to believe the plan is failing. If the plan is a failure SODA valuation is limited to some multiple, a very low multiple, of its current cash flow because the growth proposition is gone.
SODA is out of time in less than 30 days. They must either produce startling results for the second quarter or be bought out if you expect to see a rise in stock price. Otherwise the company is worth, maybe, a few hundred million, IMO. A few more days may end this story.