Well, the market disruption threat is certainly there, and much hyped by the supporters of the stock. SodaStream - the product and the technology are not so new. Growing up in England in the 1970's and 1980's, I first became aware of SodaStream. The product, a concoction of syrupy flavor carbonated at home was close to the real thing, but not close enough. The company passed from hand to hand with injections of cash and marketing, but from my recollection never seemed to develop more than a fad status.
I didn't hear of SodaStream for many years, until the 2010 Nasdaq listing. Where had it been all these years?
The company's explanation:
1903 - founded as part of W&A Gilbey, a gin maker.
1971 - sold to Reckitt & Coleman - who discontinued the product, to focus on the more promising home-brewed beer product.
1973 - SodaStream rights sold to an investor group.
1985 - sold to Cadbury Schweppes.
1997 - sold to Graphite Capital.
1998 - sold to Soda Club.
2007 - sold to Fortissimo fund.
2010 - sold to US investors (Nasdaq listing).
Of course, where there is a sale there is a buyer, but it is interesting to see how many times ownership has changed - from the articles published in Seeking Alpha, we seem to be buying it.
The same goes for the stock price. The stock has been trading up recently - at $48 it is at the high of a 52-week range from $28.2, and on a strong technical uptrend. Performance over the short listing period has been highly volatile, with a beta of 1.52, and a high of $77.68 in August 2011. Certainly not a profile for the conservative investor.
The current interest seems justifiable on the fundamentals, a frothy ttm P/E of 24, but a PEG ratio of 0.67. A growth stock playing as a market disruptor with a new product?
Some contrarian analysis from The Investing Engineer hits the nail on the head. The key risk is whether SodaStream is mainstream and represents a sustainable product challenge to the giants, or more of a fad that won't maintain the growth.
Sales growth in Europe has been strong - is this partially driven by the cost savings in a period of austerity?
The supporters point to the ecological credentials as a major sales point, and this seems a focus of their marketing. This is the only 'new' aspect of the sales proposition from the quirky and 'uncool' product of my youth. While market penetration in ultra green Sweden is reportedly high, I can't picture the typical US consumer with a similar profile.
The bottom line
This is a stock that has done well recently, has high growth estimates, good analyst support, and a strong possibility of being acquired with some upside. To buy the stock, I would need to be convinced that the product will have consistent market traction, and thus the growth promise will be realized. I am not.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.