SodaStream International (NASDAQ:SODA) has a new investor in Kase Capital's Whitney Tilson, who outlined a bullish position in SodaStream after the market closed yesterday. Shares traded more heavily than usual in the after-hours trading session, as speculation around the reason for the 3% rise was difficult to verify or confirm for investors absent any press release. The pre-market action continued this morning, with shares resuming the momentum from the prior day. Shortly after the opening bell today, investors discovered the reason for the trading activity.
In a note to investors, SodaStream's newest investor, Tilson had the following to say as he confirmed his equity stake in shares of SODA:
"Sodastream: Using a Survey to Identify My Next Deckers" dated March 5. In the slideshow, Tilson argues his survey indicates SodaStream's products are not a fad, as is assumed by many who hold short positions. "I think one of the mistakes shorts are making is that, perhaps subconsciously, they're basing their analysis of Sodastream on the company's nascent business in the U.S. This is understandable...but it's a serious mistake because...Western Europe is by far the most valuable part of Sodastream's business".
It certainly sounds like Tilson has figured out that SodaStream has a longstanding business outside of the U.S., which has grown substantially in the last several years. It's easy to label SodaStream as a fad due to its relative youth in the United States and the lack of uniformity to its beverage industry peers, but the company's existence dates all the way back to 1903. The longevity of SodaStream's business overseas, coupled with its constant adoption rates showcase the company as a disruptor of industry, and not a "fad". Based on recent results highlighted on SodaStream's Q4 2013 earnings release, SodaStream's revenue growth continues to show the demand for its products on a global scale.
I wouldn't look toward today's activity in shares of SODA as anything more than a momentary lift, as there remains a great deal of uncertainty in the market as to the company's longer-term earnings potential. SodaStream's rough 4th quarter earnings results will possibly keep shares trading in a tight range over the next few months absent any earnings-related headlines or major partnerships. So, what's next for SodaStream and the company's shareholders?
In mid-March, SodaStream will be participating in the International Home and Housewares Show in Chicago, Illinois. The company plans to highlight its new products, such as SodaCaps, Electric Source and its highly-anticipated Play soda maker. For those investors who are not familiar with the IHH Show, it is the largest household consumer goods show of the year, and vendors, manufacturers, suppliers, retailers and retail buyers, analysts and financial community participants attend the show to see what companies are doing going forward with their respective businesses and products.
The International Home and Housewares Show is of significant importance this year for SodaStream shareholders, as competition is expected to be showcased in Chicago alongside SodaStream. A host of new products for the home carbonation category are expected to debut at the show, including Bevyz, Cuisinart, Hamilton Beach, Sparkling Beverage Systems, Sanyo, KitchenAid and Green Mountain Coffee Roaster (NASDAQ:GMCR) products. The goal of any vendor like SodaStream at the show is to generate buzz for their product line and land sales from retail buyers. With SodaStream looking to penetrate deeper into existing markets, the company will have plenty of opportunity to do so when its key account managers discuss product details with retail buyers at the show. Lastly, you never know who will show up from SodaStream at the IHH Show… maybe Scarlett Johansson.
Disclosure: I am long SODA. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.