5 of the Biggest Free Falls Since Fall

by Tom Taulli | July 12, 2012 8:00 am

Groupon185 5 of the Biggest Free Falls Since FallDaily-deals site Groupon (NASDAQ:GRPN[1]) went public in November, and after a first-day return of 31%, things couldn’t have looked more promising.

And for the most part, Groupon never did look more promising.

Since late November, the company has been toxic for shareholders, with GRPN shares down 70% in their short lives.

There was ample warning from the start. Groupon had to restate its revenues[2] for the first half of 2011 — from $1.52 billion to just $688.1 million — before it even came public, as the SEC thought it was misleading to include the full value of its vouchers. Then in April, Groupon made another boo-boo and had to issue another restatement[3], this time for Q4, and again dealing with the vouchers.

Plus, other Wall Street worries have persisted. There’s hundreds of competitors in the space, it’s unclear whether merchants are getting repeat business, and Groupon continues to spend big on marketing.

All those problems have conspired to send Groupon into a tailspin since last fall — and unfortunately for investors, GRPN hasn’t been alone. Here’s a look at four other big-name companies that have absolutely fallen on their faces in roughly the same time frame:

Netflix (-60% since Sept. 15)

Netflix 5 of the Biggest Free Falls Since FallNetflix (NASDAQ:NFLX[4]) is up nearly 20% during the past week, powered by CEO Reed Hastings’ Facebook note that the company saw a whopping 1 billion hours of video watched in June.

That run-up has brought Netflix shares to above the $80 mark. And considering NFLX was trading around $300 less than a year ago, it shows you just how bad things have been for the streaming video company.

Netflix is down more than 70% since mid-July, when it announced unpopular pricing changes for its services, included a 60% price hike for streaming. But most of the damage has come since Sept. 15, shortly after Netflix warned investors that subscriber losses thanks to said pricing changes were going to be worse than expected.

Even with the recent uptick in traffic, it’s hard to get bullish again on Netflix. The competition has exploded since Netflix’s decline, with players like Amazon.com (NASDAQ:AMZN[5]), Verizon (NYSE:VZ[6]) and Comcast (NASDAQ:CMCSA[7]) upping the ante at the same time that Netflix is being squeezed to pay more for compelling content.

Research In Motion (-69% since Oct. 7, 2011)

rimm 5 of the Biggest Free Falls Since FallJust a few years ago, Research In Motion (NASDAQ:RIMM[8]) was the king of the smartphone world. It has since lost its throne, and now it’s in danger of losing its head.

Unlike Netflix, RIMM’s losses haven’t come on a couple big announcements, but rather just a steady stream as investors lose confidence in the struggling tech stock.

The BlackBerry 10 isn’t expected to hit the market until early 2013. In the meantime, Apple (NASDAQ:AAPL[9]) and Google (NASDAQ:GOOG[10]) continue to gobble up market share.

RIMM is planning to spend $100 million for its app developer program, but it’s too little — and definitely too late. Top developers aren’t going to want to create apps for a dying platform.

The company’s last hope is its patent portfolio. As seen with companies like AOL (NYSE:AOL[11]) and Motorola, there certainly is value in intellectual property for mobile technologies. But RIMM needs to act fast before its $2 billion cash hoard evaporates.

Nokia (-75% since Oct. 28)

NokiaLogo e1287009011204 5 of the Biggest Free Falls Since FallFinnish outfit Nokia (NYSE:NOK[12]) has followed essentially the same playbook as RIMM — namely, a lack of innovation has led to a smooth decline, with NOK shares losing three-quarters of their value since late last October.

The only good news for Nokia is that it struck a major deal with Microsoft (NASDAQ:MSFT[13]), which will provide access to much-needed cash to keep the company afloat. But without any truly competitive handsets, the prospects for growth are virtually nil.

Green Mountain Coffee Roasters (-80% since Sept. 12, 2011)

Green Mountain 185 5 of the Biggest Free Falls Since FallGreen Mountain (NASDAQ:GMCR[14]) made one of history’s best acquisitions when it purchased Keurig, maker of the popular single-serving coffee brewers. With the K-Cups on its side, Green Mountain was able to ignite explosive growth.

That party’s over. Since last September, Green Mountain has been torn to shreds for numerous reasons — disappointing earnings[15], attention from David Einhorn[16], a Starbucks (NASDAQ:SBUX[17]) single-serve machine[18], massive insider selling[19], store-brand K-Cups[20]. Take your pick.

And worst of all, the company will lose protection of some key patents at the end of the year — so the bloodletting might not even be through.

Tom Taulli runs the InvestorPlace blog IPO Playbook, a site dedicated to the hottest news and rumors about initial public offerings. He is also the author of the upcoming book How to Create the Next Facebook: Seeing Your Startup Through, from Idea to [21]IPO[22].  Follow him on Twitter at @ttaulli[23] or reach him via email[24]. As of this writing, he did not own a position in any of the aforementioned securities.

Endnotes:
  1. GRPN: http://studio-5.financialcontent.com/investplace/quote?Symbol=GRPN
  2. had to restate its revenues: http://investorplace.com/ipo-playbook/groupon-ipo-georgiadis-google-mason/
  3. had to issue another restatement: http://investorplace.com/ipo-playbook/its-goof-on-at-groupon-again/
  4. NFLX: http://studio-5.financialcontent.com/investplace/quote?Symbol=NFLX
  5. AMZN: http://studio-5.financialcontent.com/investplace/quote?Symbol=AMZN
  6. VZ: http://studio-5.financialcontent.com/investplace/quote?Symbol=VZ
  7. CMCSA: http://studio-5.financialcontent.com/investplace/quote?Symbol=CMCSA
  8. RIMM: http://studio-5.financialcontent.com/investplace/quote?Symbol=RIMM
  9. AAPL: http://studio-5.financialcontent.com/investplace/quote?Symbol=AAPL
  10. GOOG: http://studio-5.financialcontent.com/investplace/quote?Symbol=GOOG
  11. AOL: http://studio-5.financialcontent.com/investplace/quote?Symbol=AOL
  12. NOK: http://studio-5.financialcontent.com/investplace/quote?Symbol=NOK
  13. MSFT: http://studio-5.financialcontent.com/investplace/quote?Symbol=MSFT
  14. GMCR: http://studio-5.financialcontent.com/investplace/quote?Symbol=GMCR
  15. disappointing earnings: http://investorplace.com/2011/11/green-mountain-earnings-gmcr-casino-stocks/
  16. attention from David Einhorn: http://investorplace.com/2011/12/green-mountain-coffee-roasters-gmcr-keurig-sbux/
  17. SBUX: http://studio-5.financialcontent.com/investplace/quote?Symbol=SBUX
  18. single-serve machine: http://investorplace.com/2012/03/starbucks-single-serve-coffee-may-kill-green-mountain-sbux-gmcr-keurig-verismo/
  19. massive insider selling: http://investorplace.com/2012/05/shorts-hit-the-jackpot-on-green-mountain/
  20. store-brand K-Cups: http://investorplace.com/2012/06/krogers-to-sell-k-cups-green-mountain-shares-drop/
  21. How to Create the Next Facebook: Seeing Your Startup Through, from Idea to : http://goo.gl/RVJL9
  22. IPO: http://goo.gl/RVJL9
  23. @ttaulli: https://twitter.com/ttaulli
  24. email: mailto:tom@taulli.com

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