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Fads tend to come and go fast. Many stocks have seen momentum as their product offerings win praise by the general public. Then all of a sudden momentum can dry up as their products no longer are considered "cool". The following seven stocks offered innovative products and services, but due to competition and a change in consumer demand, the companies have been taking a significant hit. Investors should avoid these seven stocks.

Pandora Media, Inc. (NYSE:P) operates as an Internet radio company in the United States. It provides its radio service to traditional computers, Android phones, Blackberry phones, and the iPhone.

Pandora offers a great product, but they lack a great business model. As shareholders, we all want to see a return on our investment. Unfortunately, Pandora will not be able to offer that. Pandora's costs are simply higher than their revenue, something that is not sustainable. For the most recent quarter, Pandora's earnings were almost flat. For 2012, the company expects a non-GAAP loss of 2 - 5 cents per share. This is an issue for a company that commands a $1.6 billion valuation.

First Solar, Inc. (NASDAQ:FSLR) manufactures and sells solar modules using a thin-film semiconductor technology. It also designs, constructs, and sells photovoltaic solar power systems.

While solar technology is considered to be the future, competition has increased significantly. China has begun to produce solar panels and by flooding the market with supply, it has caused the prices of solar panels to fall substantially. The CEO recently stepped down in October as the company began to experience problems. Supply is a big issue for First Solar. They still have a large supply of photovoltaic products and must sell them at a steep discount. The stock has a forward P/E of 8.3.

SodaStream International Ltd. (NASDAQ:SODA) engages in the development, manufacture, and marketing of home beverage carbonation systems and related products. Its home beverage carbonation systems enable consumers to transform ordinary tap water into carbonated soft drinks and sparkling water.

Sodastream allows individuals to make their own carbonated soda. The product Sodastream offers is good for health conscious consumers. However, something important to note is that customers save more buying soda from companies like Coke (NYSE:KO) and Pepsi (NYSE:PEP). Its more costly to use Sodastream, which makes this company a fad. While Sodastream is still growing at a rapid pace, most of the growth seems to be priced into the stock. The stock has a forward P/E of 23.

OmniVision Technologies, Inc. (NASDAQ:OVTI) engages in designing, developing, and marketing semiconductor image-sensor devices worldwide.

OmniVision has been in trouble after it was discovered that the company no longer provided the main camera chips for the new iPhone 4S. A significant amount of revenue for OmniVision comes from Apple (NASDAQ:AAPL). Although OmniVision does provide the front facing camera chips, these chips are lower quality and cheaper. So this was a huge blow to the company that experience massive growth. The stock has a forward P/E of 17.

Netflix, Inc. (NASDAQ:NFLX) provides subscription based Internet services for TV shows and movies in the United States and internationally.

Netflix has a terrible this year with the stock falling almost 60% this year. This is attributed to the lack of execution by CEO Reed Hastings on how to grow the company. Netflix's planned price hikes didn't help the situation either. More and more customers are choosing to stream online and this is an issue for Netflix as the content costs are triple that of the DVD library. Netflix is no longer an innovator either as competition has increased. Amazon is already in the streaming market and Redbox is planning on enter soon too. Heavier competition will mean less pricing power for Netflix. Netflix has a forward P/E of 484, but this is includes their expansion cost into Europe.

LinkedIn Corporation (NYSE:LNKD) operates an online professional network. The company, through its proprietary platform, allows members to create, manage, and share their professional identity online, build and engage with their professional network, access shared knowledge and insights, and find business opportunities.

Many of you may have a LinkedIn account, but how many of you buy the subscription based service they offer? While LinkedIn is a great tool for networking, its a poor investment. In the most recent quarter, the company reported a loss of 2 cents per share. This is awful for a company given a $6.2 billion valuation. LinkedIn is expected to grow its revenue at a rapid pace, but this does not necessarily translate to a better bottom line for the company. While membership is growing, it doesn't mean much when only a miniscule percentage of that are buying a subscription. The stock has a forward P/E of 125.

Groupon, Inc. (NASDAQ:GRPN) operates an e-commerce marketplace that connects merchants to consumers by offering goods and services at a discount in North America and internationally.

Groupon's stock has been acting like a roller coaster since it recently IPO'ed. Groupon has been under attack for various reasons. Their are rumors about the company performing illegal accounting practices to inflate revenue figures. While the validity of this claim is still largely unknown, investors have been getting worried. Groupon is great for customers, but there have been several complaints from partner stores that they are losing money by offering such large promotions. If these retailers are not benefiting from using Groupon, then they might end up dropping the service. Not to mention that Groupon has seen competition from companies such as LivingSocial. The company is currently valued at $14.5 billion and the stock has a forward P/E of 84.5. This tells us that the market is overly optimistic about the companies growth projections.

Source: 7 Fad Stocks To Avoid In 2012