Nothing like a one time .30 dividend to prop the PPS up more than $2. I had been adding around $27. Tcap had been a nice stock. I'm trying to transfer it to a tax sheltered account. But I have to sell and pay taxes on gains in order to fund the IRA.
Q4 2012 revenue breakdown was 50% machines, 50% consumables. Your saying they kept the same revenue split in 2013 despite heavy machine discounting?
Blue. Do the math. They grew revenues by almost 30%. They cut machine prices by 25%. The only way you can cut prices and grow revenue is to sell more units. They sold 1.1 million machines in q4 2012. I bet they sold more than 1.5 in the last q.
Management had previously stated they will take revenue growth over margins. They are in a race to grow the user base. Revenue increased 29%. But machine sales likely increased 50% or more. Soda had massive inventory to unload. Soda is a young company and they are still learning how to sell and market in the U.S. Soda will be able to seriously undercut the Keurig Cold on pricing for consumers and offer a larger installed base for drinks brands.
Burgh, at this point, the only margins in home carbonation belong to Soda. Once Coke or Pepsi make the leap to selling concentrated syrups directly to consumers what is keeping them from using multiple platforms? Soda will likely have 10 million users in the next year. Why would anyone ignore that platform?
Technology is too advanced? Where is it? They announced it last year and it will be another year before it is out? What is the problem? Soda will have sold millions more machines by then. How is it going to be priced? Soda has the margins to fight for market share. How long will it take for GMCR to build a user base?
Last summer the rumors were hot and heavy that Pepsi was going to buy Soda. This coincides with Pepsi's CEO's claim that they have been investigating home carbonation for 12 months. Perhaps Pepsi executives were spotted in Israel out to lunch with Birnbaum.
We now know that Pepsi will definitely enter the home carbonation space. We do not know when or who they will partner with.
What we do know is that home based carbonation is price and value sensitive. Consumers are not in a position to spend $100-200 for a machine and $1 or more per serving. The manufacturer that can produce the most value for the consumer will likely win. Which manufacturer will be able to produce the system that can lower per serving cost? Who can scale their business the fastest and derive economies of size?
Will Pepsi invest in GMCR's platform and validate Coke's investment?
Soda is a year away from a plant that will be able to likely make 50,000 machines a day at full capacity. They currently sell more than 10,000 machines a day. Soda is setting up for massive volume expansion. Why?
Pepsi timing: When does Pepsi make their move? Before Coke gets on the shelf. Pepsi has every incentive to be the first mover and to have PepsiStream on the shelf before Coke which means they need to do a deal before the holidays 2014. They are already in discussions with outside partners and have been for 12 months. Pepsi needs the deal done in the next few months to beat Coke to market.
So what is the answer? Who does Pepsi go with? Do they let Coke become the first mover in the market? Or does Pepsi undercut Coke with PepsiStream? I'm betting Pepsi picks Sodastream, the PepsiPlay and PepsiCaps. Moving the plant out of the West Bank is a must. Easily accelerated with Pepsi $.