Green Mountain Tanks — Thursday’s IP Market Recap

GMCR shares hemorrhage 40% on slight earnings miss

InvestorPlace Market RecapGreen Mountain Coffee Roasters’ (NASDAQ:GMCR) feel-good story of the year already was hanging on a shaky precipice after a rocky October. Thursday’s earnings report was the long-awaited shove.

The Vermont-based purveyor of the Keurig single-serving K-Cups watched its stock free-fall 40% Thursday on a relatively strong earnings report that barely missed Wall Street expectations. Green Mountain reported revenue growth of 91% to $711.9 million and earnings per share of 47 cents for the fourth quarter. But those figures lagged Wall Street expectations of $760 million and 48 cents per share, respectively.

The figures were far from the norm for GMCR, marking the company’s first sales miss in two years. Further exacerbating the stock’s descent were short sellers encouraged by hedge fund manager David Einhorn’s October recommendation against Green Mountain because of accounting irregularities that prompted an SEC investigation. As of Oct. 31, the short interest on GMCR was 16%.

However, Green Mountain CEO Lawrence Blanford did not attribute the sales miss to accounting issues in the report, instead saying, “a number of factors including changes in wholesale customer ordering patterns in our grocery and club channels despite steady consumer point-of-sale demand in those channels.”

As recently as mid-September, Green Mountain was one of the year’s best financial stories. Shares of GMCR quadrupled in value since January, reaching a high of $111, and Green Mountain had made partnerships with Starbucks (NASDAQ:SBUX) and Dunkin’ Brands (NASDAQ:DNKN) to make those companies’ coffees available in its popular K-Cups.

However, by late September, Green Mountain joined a group of companies including OpenTable (NASDAQ:OPEN) and more recently Netflix (NASDAQ:NFLX) that have watched their stock price fall from triple digits into double digits this year. Green Mountain shares had slowly declined to the high $60s in recent days, but apparently still had farther to fall — by the end of Thursday’s selloff, GMCR was sitting at $40.89.

Also Thursday, casino company Melco Crown Entertainment (NASDAQ:MPEL) reported strong earnings but watched its stock — and the rest of the gaming sector — take a dive. Melco Crown reported a record $113 million in earnings for the third quarter, good for EPS of 21 cents versus analysts’ expectations of 16 cents. MPEL fell 12% to $9.60, and dropping with it were Las Vegas Sands (NYSE:LVS, -3.67%, $44.56) and Wynn Resorts (NASDAQ:WYNN, -3.5%, $119.57).

Three Up

  • Viacom (NYSE:VIA.B): Up 8.21% ($3.31) to $43.61.
  • Cabot Oil & Gas (NYSE:COG): Up 7.73% ($6.21) to $86.55.
  • Cisco (NASDAQ:CSCO): Up 5.68% ($1) to $18.61.

Three Down

  • Take-Two Interactive (NASDAQ:TTWO): Down 6.73% ($1.04) to $14.41.
  • Delta Air Lines (NYSE:DAL): Down 4.75% (38 cents) to $7.62.
  • Edwards Lifesciences (NYSE:EW): Down 3.74% ($2.68) to $69.02.

As of this writing, Kyle Woodley did not own a position in any of the aforementioned stocks. Check out recaps from previous trading days here.

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