Sodastream ’s promise to invigorate sales by reinventing itself as a health-conscious provider of sparkling-water machines is eliciting a response from investors: “Prove it.”
The Israeli company’s stock has plunged 17 per cent in New York trading from this year’s high last month compared with a 2.1 per cent drop in the Standard and Poor’s 500 Index in the same span.
The stock tumbled a record 11 straight days before climbing on Friday. The company has been struggling to replicate its European success in the US after efforts to brand itself as an alternative to Coca-Cola and Pepsi didn't align with shifting consumer preference for healthier options.
"There was a high expectation built into the market," Steven Schoenfeld, the New York-based founder of BlueStar Global Investors, a financial research firm focused on Israel, said in a phone interview. "The market was very disappointed when Soda couldn't execute well in the US."
Sodastream reported first-quarter sales of $90.3 million, missing the $100.9 million estimate of nine analysts surveyed , down from $118.2 million a year earlier.
The slump in adjusted revenue was mainly the result of foreign currency fluctuations and lower demand for carbonated water makers and flavours in the US and France, according to a company press release.
The stock soared briefly last month after chief executive officer Daniel Birnbaum said he didn't expect much competition from the Keurig Kold machine -- a soda maker set to be released later this year by Keurig Green Mountain.
It didn’t take long for investor disillusionment to set back in. The shares fell 1.4 percent to $19.52 in New York on Monday.
The company's attempt to turn around its flagging business began late last year. It involves re-branding the company as a health-conscious maker of sparkling water, which can be plain or lightly flavored. New machines are expected to reach Bed, Bath and Beyond in the US late this month and other retailers in September, and the company is making gas canisters more widely available, according to a July 7 thnote by Susquehanna International Group.
Mr Birnbaum said on Monday that “SodaStream expects the new positioning and flavor range to kick-in on the back half of 2015,” adding that 81 per cent of the company’s revenue comes from outside the US.
- Bloomberg
