In the new normal, companies can one second trade with a market cap of hundreds of millions (or over a billion in the case of negative cash flow GTAT) and the next unexpectedly report they are bankrupt, or, as SODA just did, give guidance that is just about as bad. From the just release press release which explains why the news was so bad, SODA stock actually had to be halted:
- Revenue to be approximately $125.0 million; expected: $154.4 million
- Operating income to be approximately $8.5 million; expected: $17.6 million
Translated: the SodaStream fad is officially over. From the release:
"We are very disappointed in our recent performance," said Daniel Birnbaum, Chief Executive Officer of SodaStream. "Our U.S. business underperformed due to lower than expected demand for our soda makers and flavors which was the primary driver of the overall shortfall in the third quarter. While we were successful over the last few years in establishing a solid base of repeat users in the U.S., we have not succeeded in attracting new consumers to our home carbonation system at the rate we believe should be achieved. The third quarter results are a clear indication that we must alter our course and improve our execution across the board. We have already begun a strategic shift of the SodaStream brand towards health & wellness, primarily in the U.S., where we believe this message will resonate more strongly with consumers. In addition, we are developing a comprehensive growth plan for the Company that will encompass Marketing, Product and Innovation, Distribution, Operations and Organization. We intend to share more specifics around our growth plan when we report third quarter results later this month."
Because, frankly, right now we have no idea how to turn around the Titanic after it has hit the Iceberg.
What the sellside "analysts" were saying until yesterday:
And the punchline:
Mr. Birnbaum concluded, "We have a strong balance sheet and are well positioned with ample liquidity to invest in the areas of our business that we believe will fuel profitable growth in the years ahead. Despite our current challenges, we continue to be very confident in our business model and the global prospects for SodaStream. We firmly believe that our actions to shift the brand and improve execution will strengthen our leadership position in the home carbonation category and deliver enhanced shareholder value."
A soda company having "ample liquidity"? Literally, yes. Otherwise, see GTAT about the whole "strong balance sheet" thing. Also: why not blame the weather, snow, Easter, school holidays, seasonal or Bush. Everyone else is doing it.
At this point all we can advise SODA is to do more Scarlett ads as nothing else is working. May as well go out with a, er, fizz.