This Week's 5 Dumbest Stock Moves
Jun 28th 2013 5:25PM
Updated Jun 28th 2013 5:26PM
Stupidity is contagious. It gets us all from time to time. Even respectable companies can catch it. As I do every week, let's take a look at five dumb financial events this week that may make your head spin.
1. South of the hoarder
It seems as if DIRECTV wasn't doing as well in Latin America as we may have thought.
The satellite television leader is taking a $25 million charge to account for bogus subscriber accounting after discovering that some of its Sky Brasil employees were improperly crediting subscriber accounts. The move inflated the subscriber count to the tune of 200,000 subscribers as of the end of March. Creating the illusion that those subs were still around also artificially reduced DIRECTV's churn rate.
DIRECTV expects the subscriber count to be corrected by the end of the June quarter, but it's still an embarrassing episode for the company that many see as the class act of satellite television.
2. Still wrong when it comes to Netflix
Analysts have been burned on both sides of Netflix over the years, and for now, it continues to be the bears getting scorched.
Bernstein Research analyst Carlos Kirjner is lowering his rating on the leading video service provider from market perform to underperform, but he has been so wrong on where the stock has been heading, that he's actually dramatically boosting his price target on the shares from $125 to $180.
When an analyst upgrades a stock while lowering its price target, or downgrades a stock while raising its price goal, it's a dead giveaway of a Wall Street pro that got it wrong.
3. Demand isn't the man
Shares of Demand Media plunged more than 20% on Monday after the content farm operator hosed down its near-term outlook.
A reduction in referral traffic from search engines is brutal, because Demand Media's model relies on farming out content on the cheap, and making that back through traffic from organic search engine results.
Things just haven't gone well for Demand Media since going public at $17 in early 2011. A couple of analysts -- including JMP Securities and Stifel Nicolaus -- lowered their stock ratings on the news.
4. Throwing the book at the Nook tablet
After nearly three years, Barnes & Noble has had enough of its money-losing foray into tablets.
The struggling book retailer finally pulled the plug on its Nook Color. Barnes & Noble will continue to make its traditional Nook e-readers, but the market for multi-purpose color tablets that also double as e-readers was just too cutthroat for a company that has a long road back to turning an annual profit.
Letting go is the right call, but it makes the cut this week because the chain went with tablets in the first place. It was never going to undercut the e-reader leader that has no problem taking a hit on the hardware in exchange for hooking a buying into its ecosystem. Barnes & Noble is in a difficult spot as store sales stumble, and it should've been devoting more of its attention to promoting its original Nook product line.
It will do that now, but it may be too late.
5. Shield your eyes
NVIDIA was hoping to make a big splash in the portable gaming market with Thursday's introduction of Shield.
Well, it didn't happen.
A day before the handheld Android gaming device's debut, NVIDIA announced that a mechanical issue would be bumping the gaming gadget's rollout to later this summer.
NVIDIA Shield was already off to a dubious start. Last week, NVIDIA cut the price from $349 to $299. You don't often see that happen days before a release unless demand was soft. Now, the delay is going to make more early adopters cautious about diving into a device where a mechanical defect didn't come to light until a day before its actual retail release.
NVIDIA is a great company when it comes to graphic chips, but it has a lot to prove now when it comes to gaming hardware.
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The article This Week's 5 Dumbest Stock Moves originally appeared on Fool.com.Longtime Fool contributor Rick Munarriz owns shares of Netflix. The Motley Fool recommends DirecTV, Netflix, and NVIDIA. The Motley Fool owns shares of Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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