Looks like talk of bankruptcy was way, way overdone. Some of the recent blog posts were not wrong about risk factors, and there has been a stretch of over promise under deliver, but a lot of the short thesis seems to be off the table now that the financing is pretty comfortably in place. Hope some of the better analysts on the short side took the opportunity to cover at the lows. They deserved to make a few bucks on the call, but those still hanging on may be getting greedy if you ask me.
Transition period through and through. Sales got pumped up with the walmart roll out last year, and have now slowed down a bit. Management has had a very difficult time managing inventory and forecasting what the true trend is. Thats frustrating for longs that have been along for the ride, but normal and has very little to do with the underlying value. The global installed user base is worth a fair amount, but need to retrench a bit - cut down inventory, skip the all or nothing type walmart promotions and advertising. I expect the churn has been artificially high this year for some of the same factors. They should stop panicking about replacing that churn and keep focusing on adding incremental, high-value customers to the user base....
Well, next week a real data point... may be as bad as so many claim, but at some point people will get tired of selling for the same reasons week after week.
This can keep going down way more than any longs thought possible and value has nothing to do with it, but it is still a value down here... dire predictions of teens or single digits are just mono wannabes. Not saying liquidity sellers and panic can't take it down there, but there is no legitimate reason to predict it. I continue to expect a substantial rebound eventually, but in the short run who knows. I also see the longs who are coping with this move by ranting against management or citing expectations for lowered guidance as in just one of the stages of grief. This is trader territory, not for bargaining...
You can say whatever you want about the current Q or full year guidance, but this kind of selling is a very unique situation. You never know where it will end, and it goes way further than you ever thought possible, but eventually it stops and the market has to actually take a minute to decide what the co is worth. Plenty of good opportunities follow this pattern... GMCR in the 20s, AAPL at 400, HP in the single digits.... Then some never recover too. Here, I say the user base and market position are very valuable regardless of earnings missteps. The slowdown in the US is no surprise. There was a massive surge with the original walmart roll out, that low hanging fruit is gone. Some people became loyal customers, others churned. So what? This is a hard situation to manage, but far, far from a disaster. Now there is a meaningful global user base that can continue to be monetized, additional modest growth will be added, and if the SP doesn't recover in a hurry it will be acquired. Selling like this happens regardless of valuation, and even those interested can just standby and watch the carnage. I say write at the money puts. If you get allocated shares you are getting them at absurdly low valuations, and if not you pocket double digit returns in a matter of a month or so. If you are a believer and like to speculate on potential medium term multi baggers then write in the money puts, or skip them altogether and just buy. Happy trading.
I think at some point people need to stop worrying about earnings and PE ratios and accept that the user base alone is worth well over $600 million. How much do you think GMCR and KO are investing to bring a product to market that may never even be as successful as this one? The valuation is a joke, but yes, management has made some missteps too. Regardless, they have a good user base and market position, only a matter of time before panic abate and value is realized...
Don't know about the speculation, but doesn't this seem like a natural possibility to prepare for and something management would care about in their plans?
I don't see how shorting shares is protection. The only reason I can see to do this would be if you wanted to avoid paying taxes on gains, but expect near/mid term weakness. But here nobody at this point would have much if any gains if they bought after the ipo. Shorting shares is no different from selling, so if one wants to sell they should sell, why would they pay margin at all or otherwise complicate their position?
If you truly want protection you need to buy puts, but they are very expensive for a volatile name like this. At this point I would rather be writing puts and cashing in on that volatility. For anyone interested in entering a position here that is a great option. You can collect a couple bucks of premium for at the money short term options right now. I have been writing some of those on the way down but am likely to be assigned the shares at this point.
I am not looking to buy costly protection here, but like so many others (and a part of why lower prices bring lower prices) there is a small chance I could be forced to simply make sure I can weather any storm. But that's why these absurd moves happen, sometimes your hand is forced regardless of how you view things to come.
Scooped up some more today. Have to admit, I am making the same mistake I occasionally do. Was trading the range from the long side, having a good run, then started buying into this downturn. I am still perfectly comfortable buying, but the position is getting large and the selloff continues... I could switch to an option strategy to limit the extreme downside risk, but that comes at a cost. Would not be surprised to see more panic and margin selling, and may move hard to options in that wake, but like I said, pretty comfortable. Longs are panicking, support is lost. GMCR in the 20s and AAPL at 400 felt hard at the time, and now they look like the no brainers of all time. I expect in two quarters we will get that view here. May not be a triple, but the longs will look back and wonder what could possibly have been going through peoples minds back when...
I would say we are at about the ideal time to buy. In the past couple of quarters people have gone from singing praises to a dire outlook. The most adamant of longs are expecting gar-bage at best and calling for management's heads otherwise... It does feel like we are a ways from the other side, but that is simply the way it goes when it is time to buy. Whether it was gmcr in the 20s or aapl at 400. Everyone hates them at the bottom. These kinds of nonstop downturns are far beyond three standard deviation type moves. You never know when they are done, but you certainly want to be there when they are
Ah, here I am, scooping up shares in another stock that seems to be in free fall. Momentum builds and more and more run for the hills while shorts get bold. Seen this story too many times. GMCR may have been the most epic, but far from alone... happy trading.
I wrote posts about GMCR as a takeout back when it was at 50. I can add more detail here over time, but the value appears at least as compelling. Really, GMCR should buy before SBUX does. The sale can probably be done for less than $60, Keurig would be truly entrenched as at home beverages and not just coffee. Keurig cold would be marketed premium while soda products would round out the market with a more basic soda product. And really they should, because the market will be otherwise disappointed when they find out what a niche the keurig cold caters to in terms of a premium market. The acquisition could also make sense for sbux, but seriously, gmcr should move quickly if they want to prevent leaving this wide open hole in their strategy. Remember how much they paid up to make sure they had all the original keurig licensees? I see this as the same threat. Now that GMCR is a $20B company it is irresponsible not to pay a couple B for SODA to address this market dynamic...
Anybody reading into this market with moves on crazy low volume is fooling themselves. Couple of weeks ago everyone was doom and gloom, then we have a couple of no volume up days and everything's coming up roses? Too funny that suddenly people are reading into better data, ECB hope, etc etc. Yeah right, give it a week and we will be back to the same old hand wringing over the coming tightening if the economy improves, and if it doesn't improve, well then we're all doomed anyway… Soda meanwhile is adrift along with every other individual name. Low volume lets it move 7% on an analyst downgrade, but that can cut both ways. It is still range bound for the time being and we are well into the buying territory of that range…. Happy trading!
Boo, low volatility today = boring trading. Was looking for a dip at the close to reload but didn't quite get there. This whole market is acting crazy though…. just traders' paradise, nobody knows what direction the fundamentals are headed in so getting all kinds of crazy moves and divergences. I was getting short the S&P into the close, not looking for crazy dips, but feel better trading the range from the short side than the long side these days. And I just do not buy into this upward drift on no volume. There is plenty to worry about when people have time to again.
That kind of reaction to an analyst report on moderate volume?? Sometimes even I forget what it is like to trade these retail heavy small cap story stocks… Bought all the way down today, flipped the shares from 37.10 and 37.20 at 38 and change… Wound up with a bigger position than I normally like, but need to be a buyer on analyst fluff in the 38s, not a seller… Still can reload though if we see those lows again. Trading soda is basically a full time job this past six weeks or so. Hope the excitement continues, hard to make any money without these kinds of swings!
I agree, but it may in large part reflected in the current price. If too many people are trying to play a dip on a secondary…well, lets just say the obvious trade stops working… Give then circumstances one should be asking how to position this. There are plenty of ways to make money, but more complex than the one or two event outlined in this thread
I'm with you on that, trade accordingly… I took some pain on the last ER, but have more than made up for it trading the aftermath and more recently trading the range from low to sub 40s to mid 40s. Doesn't get much better than it has been here the past couple months. I know full well how out of whack valuations can get, but at an 800M market cap and 70M EBITDA I am pretty comfortable… Strategic value, huge markets, flailing competition… Lots to debate about the strategies and network effects, but like I said, pretty comfortable… When this and GMCR were both in this price range I was way happier trading GMCR, but that ship has sailed and it is in a land I won't touch, so this is about the next best repeat I know of. I do hope for your sake you pulled back trading those daily shorts on GMCR….
But what exactly do you suggest we do to get a decent coffee beverage anywhere anytime we want it? I feel like you are suggesting we should either skip it (which doesn't make sense because it is up to us to decide if we want it), or you think we should get some inferior product, like from a gas station or something… not sure.
After having a pretty mediocre year to date I sure made up for it lately, almost entirely with SODA… Was a big buyer under 40, sold on the last rumor pop, then rebought on the dip only to do the whole thing all over again. Yeah, thats fun! Was buying yesterday and this morning in the 41.10 to 42 range, only to turn around and flip them this afternoon. I actually own less than I would like to at this price, but after experience can't help but sell on these random pops… Would love to pick up some more in the 41 or less type range on monday, but we'll see. Need to watch out for the hold going in to earnings.