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Green Mountain's (GMCR) growth story is dead, says CNBC's Herb Greenberg. The company's CEO all...

Green Mountain's (GMCR) growth story is dead, says CNBC's Herb Greenberg. The company's CEO all but said so in its conference call, saying “After several quarters of robust adoption, we now expect a more moderated growth trajectory going forward for both Keurig brewer and K-Cup pack sales.” "Moderated growth trajectory going forward?" Those are definitely not words you want to hear from the CEO of a high-flying growth company. Shares -40.6% AH.
Comments (78)
  • DeepValueLover
    , contributor
    Comments (8139) | Send Message
     
    Amazingly, Whitney Tilson just went short GMCR before the collapse.
    2 May 2012, 07:55 PM Reply Like
  • OneLongTrade
    , contributor
    Comments (17) | Send Message
     
    In the CNBC article, Tilson mentions he was short since the $80s and is not covering a single penny. Also Einhorn unveiled GMCR's shady practices when it was trading near $100. This company's collapse was a long time coming, much like NFLX.
    2 May 2012, 08:17 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (8139) | Send Message
     
    Einhorn may be the world's best short seller.
    2 May 2012, 08:30 PM Reply Like
  • OneLongTrade
    , contributor
    Comments (17) | Send Message
     
    He has quite the knack for uncovering deep dark secrets that the blind bulls often forget to look for. Although one must wonder that if his reputation can unfairly punish certain stocks. He questions a few things during the HLF call and all of a sudden the stock collapses in 2 days? All I know is, he has an amazing track record and if he said tomorrow to short AAPL, I would not want to be long that stock despite how solid the fundamentals are. THAT'S how much I respect his insight and experience.
    2 May 2012, 08:32 PM Reply Like
  • lucagrs
    , contributor
    Comments (68) | Send Message
     
    according to sec filing he is long in fact
    2 May 2012, 09:16 PM Reply Like
  • XTigerX
    , contributor
    Comments (229) | Send Message
     
    Certain kinds of short trades do not have to be reported. So if he says he's short, then he is indeed short.
    2 May 2012, 10:38 PM Reply Like
  • PDT
    , contributor
    Comments (343) | Send Message
     
    @lucagrs: It's actually pretty common for hedge funds to be long some shares of companies that they have larger short positions, or if they are long speculative puts (bearish). It's a way of hedging exposure.
    4 May 2012, 09:59 AM Reply Like
  • TruffelPig
    , contributor
    Comments (4055) | Send Message
     
    I would say Greenberg's short case is now dead because we are now having a company with a P/E of less than 15 in front of us. It is still growing albeit more at a normal level. Since the P/E compression has already happened I am not too sure we have too much downside from here. I agree we won't see 100% ROI/year anymore, but 10%-20% is nice too, or not?
    2 May 2012, 07:56 PM Reply Like
  • OneLongTrade
    , contributor
    Comments (17) | Send Message
     
    TP, Tilson mentions why he's not covering his short, despite the drop. There are more concerns for the future that make present P/E numbers as displayed on finance websites meaningless. Here's the article http://bit.ly/IKFXK2.

     

    A few key points are, they're going to lose the patents to K-Cup later this year and competitors will force margin compression. Many are expecting significant compression. Additionally, Tilson mentions sketchy accounting practices that pulls forward future sales to make the present look a whole lot better than it actually is. GRPN tried to do something similar to that. Point is the P/E is only accounting what is known, but there are plenty of highly probably unknowns that can wreck current growth projections.
    2 May 2012, 08:21 PM Reply Like
  • TruffelPig
    , contributor
    Comments (4055) | Send Message
     
    All known. GMCR will probably survive. You could get around those patents pretty easily. But who knows. Just speculating on dead cat bounce.
    2 May 2012, 08:26 PM Reply Like
  • OneLongTrade
    , contributor
    Comments (17) | Send Message
     
    How much margin compression from competitors I would argue is an unknown. How much sales are going to continue to decline is an unknown as well. I can see a dead cat bounce happening, but I don't think you can use the 15 P/E argument. AAPL is 15 P/E. GMCR is no AAPL. If you're trading for the bounce, good luck, but I don't advise anyone to turn this into anything more than that.
    2 May 2012, 08:29 PM Reply Like
  • TruffelPig
    , contributor
    Comments (4055) | Send Message
     
    I would never compare GMCR with my iron core position AAPL. GMCR however has made good acquisitions and partnerships. It is top dog in this coffee maker business - probably for years to come.
    2 May 2012, 08:33 PM Reply Like
  • OneLongTrade
    , contributor
    Comments (17) | Send Message
     
    Well my point was about the P/E specifically. It's a silly comparison and just shows how useless current P/E really is. Why is AAPL 15 and GMCR 15? SBUX announced they're entering the keurig cup business too, so I don't think GMCR is top dog really. You have to consider how much of the share price run up to $100+ (right around when Einhorn said he was short the company) was baked in by the believe of incredible growth. I'm gonna side with Tilson on this one, I would bet it goes lower over the course of the year.
    2 May 2012, 08:36 PM Reply Like
  • JSCHALL
    , contributor
    Comments (27) | Send Message
     
    I agree with this. Hard not to cover a short and go long here. You could buy the stock here, sell a near-term $35 covered call on your position, and make a very nice return regardless.
    3 May 2012, 08:34 AM Reply Like
  • untrusting investor
    , contributor
    Comments (9923) | Send Message
     
    Wow .... -40% in one day. That's gonna hurt some of the momo boyz a lot.
    2 May 2012, 08:00 PM Reply Like
  • New Low Observer
    , contributor
    Comments (2030) | Send Message
     
    Hey UI,

     

    Correction on that, -40% in the AH only. Getting crushed on a fraction of the volume of a regular trading session really hurts. The worse part is, those who use stop-loss orders are going to be out in the worst way possible.

     

    Regards.
    3 May 2012, 09:24 AM Reply Like
  • Paulo Santos
    , contributor
    Comments (17773) | Send Message
     
    It's weird that it gets so punished, AMZN is doing much, much worse and trades at multiples 10X higher, and doesn't get hit at all. There's something wrong with the market.
    2 May 2012, 08:01 PM Reply Like
  • Whitehawk
    , contributor
    Comments (3129) | Send Message
     
    AMZN trades on strong upside sentiment for growth going forward. That is the opposite of the GMCR case.
    2 May 2012, 08:05 PM Reply Like
  • Paulo Santos
    , contributor
    Comments (17773) | Send Message
     
    Which is funny because GMCR's growth exceeds AMZN's (in revenues and earnings - indeed AMZN's earnings are dropping), and the downward earnings estimates revisions in GMCR are much milder than AMZN.

     

    See my point?
    2 May 2012, 08:08 PM Reply Like
  • Fin858
    , contributor
    Comments (462) | Send Message
     
    The problem is that AMZN has a massive barrier to entry: it can operate profitability at a lower Gross Margin as compared to WMT or almost every other retailer. Simply, it is the low cost provider now within retail.

     

    AMZN is essentially the WMT of our time.
    2 May 2012, 08:16 PM Reply Like
  • TruffelPig
    , contributor
    Comments (4055) | Send Message
     
    I agree 100% with you. Even if GMCR slows down, it is still growing! And it actually makes money.
    2 May 2012, 08:17 PM Reply Like
  • Paulo Santos
    , contributor
    Comments (17773) | Send Message
     
    Fin, that's not true - WMT has operating costs / revenues that are lower than AMZNs. And COST's are less than HALF AMZN's ... AMZN is not the low cost provider.
    2 May 2012, 08:41 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (8139) | Send Message
     
    Yeah?

     

    What is the cost of this item at WalMart?

     

    http://amzn.to/KRrimb
    2 May 2012, 08:46 PM Reply Like
  • Paulo Santos
    , contributor
    Comments (17773) | Send Message
     
    DVL, dunno if you're addressing me, but the operating costs ex-cost of sales/revenues is a fact, AMZN's are higher than WMT's, and MUCH higher (double) than COST's.
    2 May 2012, 08:53 PM Reply Like
  • Fin858
    , contributor
    Comments (462) | Send Message
     
    at what revenue amount? WMT needs $440B to get at 25% GM and ~6% OM. AMZN operates at 22.4% GM and 1.8% OM. AMZN does this on $48B. At the end of the day AMZN has a lower cost structure, no retail stores, able to leverage its distribution centers and the fact that it does need to provide the logistical network that WMT must to fund its inventory.

     

    My point is that when AMZN reaches $440B in revenue they will have the same OM as WMT does now, operating at a lower GM, thus offer more competitive prices to the consumer.
    2 May 2012, 08:54 PM Reply Like
  • Paulo Santos
    , contributor
    Comments (17773) | Send Message
     
    Nope - again, you need to read the SEC filings.

     

    AMZN's VARIABLE operating costs below gross margin are higher, per revenues, than either WMT or COST. And yes, they are variable AND growing faster than revenues. Shipping&Fulfillment, for instance, are massive.

     

    Here's what I wrote a while ago:

     

    "Amazon.com's operating costs ex-cost of sales/revenues come to 22.5% of sales (Q1 2012), whereas WMT's are 19.2% (2012 FY), and Costco's (http://bit.ly/uKeeku) are 9.5% (Q1 2012). So Amazon.com competes on price while not being a cost leader. That's not a recipe for success over the long term."
    2 May 2012, 09:00 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (8139) | Send Message
     
    The point I was trying to make is that Wal-Mart may have lower operating costs but Amazon has a virtual "inventory" that even the mighty Wal-Mart can't even dream of.

     

    What they lose on one particular unit to Wal-Mart they make up on extreme high margin items. Even if those items have very low volume.

     

    Wal-Mart is doing just fine and isn't going anywhere but one day Amazon will match their volume (not even remotely close now but remember newspaper readership vs. Internet adoption in the 1990s and how the newspapers laughed at the idea that their models will fail in the face of the growing Internet?)

     

    If I'm a Wal-Mart executive then I may not be worried when I look at Best Buy's slow fade out but I'm paying close attention!
    2 May 2012, 09:02 PM Reply Like
  • Paulo Santos
    , contributor
    Comments (17773) | Send Message
     
    No:
    1) They don't make it back as we see in the aggregate earnings;
    2) The sheer diversity might, itself, push margins down.
    2 May 2012, 09:05 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (8139) | Send Message
     
    O.K.

     

    I've seen how you deny reality with SHLD so I'm not going to play this game with you again so I'll just say your numbers don't add up but maybe THIS thesis will work out for you...unlike Sears Holdings.

     

    Good luck!!
    2 May 2012, 09:13 PM Reply Like
  • Paulo Santos
    , contributor
    Comments (17773) | Send Message
     
    What numbers don't add up? You have ANY doubt that the aggregate margins - including those unique products you named - are lousy over at AMZN?

     

    Geeez. The one denying reality isn't me. the margins are near non-existent.
    2 May 2012, 09:16 PM Reply Like
  • Matthew Lewis
    , contributor
    Comments (317) | Send Message
     
    Comparing AMZN to GMCR?

     

    I won't defend AMZN's valuation, but you're comparing apples to oranges. GMCR makes money on basically one item, the K-cup, which by the way comes off patent this year. How is a comparison to the behemoth Amazon comparable in any way, other than they are both considered high growth companies?
    2 May 2012, 09:51 PM Reply Like
  • northhills24
    , contributor
    Comments (1556) | Send Message
     
    Sorry but you can't compare GMCR to an Amazon... a huge online store? Bestbuy, Walmart to a Starbucks..??
    2 May 2012, 11:41 PM Reply Like
  • northhills24
    , contributor
    Comments (1556) | Send Message
     
    exactly! totally agree Matthew...
    2 May 2012, 11:49 PM Reply Like
  • Paulo Santos
    , contributor
    Comments (17773) | Send Message
     
    eheh, well, Amazon barely makes money on all items, so how are they not to be compared?

     

    Amazon has:
    * Declining earnings;
    * Declining revenue growth guidance;
    * Declining earnings guidance;
    * Declining opearting cash flow TTM;
    * Plunging free cash flow TTM;
    * Declining cash;
    * Huge threats, like a change in paradigm on digital goods sales;
    * Need to collect sales taxes that will hit revenue growth and margins;
    * Google about to launch cheap tablet that's a lot better than AMZN's
    * And yet trades at a MUCH higher valuation than GMCR.

     

    So yes, they are comparable - in the sense that AMZN is MUCH worse off than GMCR, at this moment, even if it hasn't plunged already.

     

    Also, AMZN guided the next Q down 90% - don't believe me, check the consensus estimates, they went from $0.20 to $0.02. And 2012 was down as well, by as much as GMCR guided it down.
    3 May 2012, 06:25 AM Reply Like
  • JSCHALL
    , contributor
    Comments (27) | Send Message
     
    I agree with this. Besides, 40% downside is an over-reaction to this story. 40% in an instant on this news is ridiculous. The company will still grow and make money. Even adjusting its forward earnings, the stock would be a good trade here. Sell near-term covered calls to further reduce your cost basis.
    3 May 2012, 08:38 AM Reply Like
  • Matthew Lewis
    , contributor
    Comments (317) | Send Message
     
    The declining earnings and cash flow are from huge cap ex spending that is temporary. Like I said I won't defend the valuation, but if you want to look at which company is at a greater risk of going out of business in the next 5 years, its GMCR hands down.

     

    They make money off ONE product. The barriers to entry go down to almost nil as soon as those K-cup patents come off. Margins on K-cups will be absolutely destroyed and many other companies will certainly be making their own Keurig's. Add in the SEC probes for accounting issues and the consistent swings in inventory management every quarter (which is either due to poor management or shady accounting) and I have no problem justifying their current valuation.
    3 May 2012, 08:45 AM Reply Like
  • Paulo Santos
    , contributor
    Comments (17773) | Send Message
     
    No - capex does not hit earnings directly, and cash flow imploded as much due to a change in working capital, as it did from capex. Earnings are down because every other operational expense is growing faster than revenues.

     

    There are little barriers to entry in online commerce as well - certainly the brand makes more difference in GMCR's market, than it does in online commerce, where it's all about price.

     

    AMZN has issues with the IRS, SEC, and also due to inventory management as well - just witness how they haven't been ordering Kindle eReader parts inventory for 4 months now, meaning they had a huge glut of the devices. AMZN also uses accounting gimmicks to make numbers, just witness what LivingSocial did this very quarter, to the tune of $248 million.
    3 May 2012, 08:50 AM Reply Like
  • Matthew Lewis
    , contributor
    Comments (317) | Send Message
     
    As I said my point isn't to defend AMZN, but to justify the valuation of GMCR. You seem to be completely unconcerned with this patent cliff...what estimates are you modeling for margins on K-cups after the patent comes off? What margins have you modeled for current K-cup sales?

     

    You can talk about low barriers to entry in e-commerce all you want, but why after this many years is AMZN still the leader, with little to no barriers to entry? GMCR is the leader because of patent protection. Do you see a tangible threat to AMZN in the e-commerce world within the next 4 months that could cut margins by 50-75% on their products? Because that is what is going to happen to GMCR in September...
    3 May 2012, 09:07 AM Reply Like
  • Paulo Santos
    , contributor
    Comments (17773) | Send Message
     
    AMZN is the leader because other business are not willing to drive margins so low, they would rather lose revenues than do so.

     

    I am not defending GMCR, only showing that AMZN is doing quite a bit worse than it. The patent might be a problem, but be aware that in GMCR's market the most important barrier is brand, not a patent. Other brands could launch capsule drinks already, being able to launch k-cups is not a huge difference, though obviously since they are probably too expensive, it might attract competition.

     

    AMZN has already seen a 50-75% drop in operating margins, you don't need to wait for the next 4 months. And funny enough, estimates for the next Q were recently cut by 90% ... eheh.
    3 May 2012, 09:12 AM Reply Like
  • Matthew Lewis
    , contributor
    Comments (317) | Send Message
     
    If you think that GMCR has a good degree of brand loyalty you should absolutely buy the stock now. I'm not sure you can make a statement like that though because no other company has had a chance to enter the market because of the patent. The next 6 months will be interesting.
    3 May 2012, 09:17 AM Reply Like
  • DeepValueLover
    , contributor
    Comments (8139) | Send Message
     
    GMCR is like a pharmaceutical stock with one blockbuster drug that is coming off patent.
    3 May 2012, 10:37 AM Reply Like
  • Elliott Auckland
    , contributor
    Comments (119) | Send Message
     
    Doesnt look that expensive now being at $30.
    2 May 2012, 08:15 PM Reply Like
  • TruffelPig
    , contributor
    Comments (4055) | Send Message
     
    Exactly. PE of 15 or so.
    2 May 2012, 08:16 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (8139) | Send Message
     
    So their 100% revenue growth has been slashed to only 50%?

     

    Cut their retained earnings growth in half and you get 55%.

     

    ...and their price to earnings growth ratio jumps from 0.06 to 0.13?

     

    Unless Tilson can prove massive accounting fraud or if losing the patent sends sales down 70% I don't know how GMCR is not a buy under $30.

     

    Looks like we have a screaming growth stock turned into a growing value play here...

     

    The JAN13 calls will drop from 21 to 10 (!).

     

    Looks like a great buy.

     

    (or better yet sell naked at the money puts to take advantage of the HUGE premium that is coming into the name.)
    2 May 2012, 08:36 PM Reply Like
  • Paulo Santos
    , contributor
    Comments (17773) | Send Message
     
    yes, as long as one believes the numbers.
    2 May 2012, 08:42 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (8139) | Send Message
     
    well, like I wrote:

     

    "Unless Tilson can prove massive accounting fraud"...
    2 May 2012, 08:47 PM Reply Like
  • JSCHALL
    , contributor
    Comments (27) | Send Message
     
    Exactly.
    3 May 2012, 08:39 AM Reply Like
  • eerales
    , contributor
    Comments (2) | Send Message
     
    So do you think it´s a good opportunity to buy GMCR under $30?
    3 May 2012, 12:08 PM Reply Like
  • Paulo Santos
    , contributor
    Comments (17773) | Send Message
     
    If it's not a fraud it should trade higher than this.
    3 May 2012, 12:11 PM Reply Like
  • BadCop_NoDonuts
    , contributor
    Comments (482) | Send Message
     
    If I had been long, I would be tempted to buy more under $26 just to break even after the bounce. But being long was insanity, gotta feel for them today!
    3 May 2012, 12:37 PM Reply Like
  • TruffelPig
    , contributor
    Comments (4055) | Send Message
     
    Motley Fool on it: http://bit.ly/Krt0p8
    2 May 2012, 08:57 PM Reply Like
  • Rico59
    , contributor
    Comments (215) | Send Message
     
    If all this talk about what a POS this stock is was such a no-brainer, why hadn't the stock collapsed before this? Tilson's track record is risible.

     

    I'm not saying GCMR is the Second Coming, just that this is gross Monday morning quarterbacking. I DID buy this puke-up, am already in the black, and am expecting a little more sanity going forward.
    2 May 2012, 09:06 PM Reply Like
  • Paulo Santos
    , contributor
    Comments (17773) | Send Message
     
    A 40% haircut clearly seems too much. But the market has been strange lately, AMZN was awarded with a 20% jump upon guiding down next Q by 90% and the full 2012 was cut about as much as GMCR's ...
    2 May 2012, 09:09 PM Reply Like
  • OneLongTrade
    , contributor
    Comments (17) | Send Message
     
    Already in the black despite the stock closing near its lows in AH. You, sir, have impeccable timing. I agree this move is overdone today, but over the long term the selling is far from over. GMCR has collapsed multiple times to the tune of 15-25% drops, just not a 40% drop in one day. Just look at the 2 year chart. You can identify points in time, from when Einhorn announced he was short and why (it dropped from $100+ never to recover), and multiple times throughout the past year, the most recent sharp drop being when SBUX announced it would be entering the keurig cup business.
    2 May 2012, 09:17 PM Reply Like
  • TruffelPig
    , contributor
    Comments (4055) | Send Message
     
    I bought shares too - the bears (short sellers) here (see above) even think this move is way overdone. That is when you buy. When Paulo doesn't understand the world - well, buy. I am NOT in the green because I bought above 30 - so I am still 2% down. But this is a very small starter position or trade position depending on what news come out tomorrow and thereafter.
    2 May 2012, 09:33 PM Reply Like
  • OneLongTrade
    , contributor
    Comments (17) | Send Message
     
    Fair assessment TP, and good luck to ya. Full disclosure, I am not short GMCR currently. I was short via puts in the $60s and took my profits the day of the SBUX announcement. Regret not getting back into it, but alas, such is trading. I don't like the GMCR story, nor do I like the outlook, and I guess that may make me a bear, but there are far, far better companies to put money into out there.
    2 May 2012, 09:36 PM Reply Like
  • Rico59
    , contributor
    Comments (215) | Send Message
     
    I don't know about my timing, but I'm not averse to making a quick buck. I've been at this game a very long time, and the odds are good that we'll see a bounce pretty quick. It happens all the time.

     

    I really don't care about the play-by-play, Einhorn, Tilson, or any of it.
    2 May 2012, 10:06 PM Reply Like
  • New Low Observer
    , contributor
    Comments (2030) | Send Message
     
    Greetings Rico,

     

    You're probably right on target with that remark. We've got a short-term upside target of $35.50. In the medium term, our upside target is $42. Our new downside target, for now, is $22.53. But that is after the run-up to $35.50 and possibly $42 (found here: http://seekingalpha.co....)

     

    We did a piece back in October 2011, when GMCR was $64, projecting a worse case scenario of $37.21 which we missed by 6% on Nov. 10, 2011 (found here: http://seekingalpha.co...).

     

    Regards.
    2 May 2012, 11:40 PM Reply Like
  • New Low Observer
    , contributor
    Comments (2030) | Send Message
     
    We've got a new downside target of $8.30 for GMCR as indicated in our May 2nd posting found here (http://seekingalpha.co...).
    7 Jul 2012, 05:14 PM Reply Like
  • SKaye
    , contributor
    Comments (18) | Send Message
     
    Herb Greenberg says whatever Einhorn tells him to say. GMCR had an outstanding 1st quarter and then miscalculated demand in the 2nd quarter and had inventory build up. The growth for revenue and eps for the quarter is only around 33%. Yes, lower than their guidance, and the yearly growth will slow to the 50% range, but it is a relatively new business with many hard to predict metrics. This growth story is not dead.
    3 May 2012, 12:51 AM Reply Like
  • TruffelPig
    , contributor
    Comments (4055) | Send Message
     
    I think I would agree. If the report ok nrxt quarter the stock is on super sale now. Mega barrato as they say here.
    3 May 2012, 06:28 AM Reply Like
  • New Low Observer
    , contributor
    Comments (2030) | Send Message
     
    Greetings SKaye,

     

    Greenberg knows far more than Einhorn and the proof is in all years he wrote the business column for the San Francisco Chronicle (found here: http://bit.ly/IYxe9M). His work on accounting irregularities and corporate malfeasance is far more extensive and proven.

     

    Regards.
    3 May 2012, 09:52 AM Reply Like
  • Tack
    , contributor
    Comments (12717) | Send Message
     
    The whole K-cup business reminds me of other fads that had explosive growth, followed by harsh doses of reality.

     

    Looking at some tea the other day at the supermarket, I see sitting side by side 20 tea bags for $2.59 (13 cents a cup) and 12 K-cups for $8.59 (72 cents a cup), a 454% premium. Even the most infatuated adopter of this new brewing system (and even that has many flaws which limit the quality of the brew) finally discovers the usurious economic reality of using these devices to make the daily brew.
    3 May 2012, 08:22 AM Reply Like
  • Paulo Santos
    , contributor
    Comments (17773) | Send Message
     
    The K-cup is sustainable, it's similar to nespresso here in Europe, that's not going away as it's very convenient. Coffee isn't going away either.

     

    Sure, GMCR might lose business to WMT, SBUX, Nestle or someone else, but the concept itself is not going away, it's not a fad.

     

    72 cents is expensive, but Nespresso comes to about 40 US cents as well. There's certainly a vulnerability there.
    3 May 2012, 08:24 AM Reply Like
  • TruffelPig
    , contributor
    Comments (4055) | Send Message
     
    SBUX sells a cup of coffee for like $4...rediculous. Still, everyone likes that company (not me).
    3 May 2012, 08:37 AM Reply Like
  • JSCHALL
    , contributor
    Comments (27) | Send Message
     
    I don't think that you can compare the cost of a cop of tea to the cost of a cup from a K-cup, and make the assumption that consumers will feel it is overpriced. Assuming your figure of 72 cents a cup, and that being too high for consumers, look at the "experience" and "convenience" people are willing to pay for a $4.50 cup of coffee or tea at Starbuck's?
    3 May 2012, 08:42 AM Reply Like
  • Tack
    , contributor
    Comments (12717) | Send Message
     
    JS:

     

    At least in my own opinion there's a big difference between being out on the road for coffee and making it at home. Nobody compares a restaurant experience with the cost of making that same meal at home. There's more going on that comprises that overall experience, i.e., the service, convenience, etc.

     

    But, when I make coffee at home, it's apples against apples, and Keurig (K-cup) (I tried one) has lots of drawbacks versus my Capresso grinder/brewer:

     

    1) Keurig is only faster if the water is always pre-heated, but this causes both evaporation and alterations to flavor if allowed to sit over time. And, for multiple cups, mass brewing is easily faster and more convenient.

     

    2) Keurig has no effective means to control the brew strength other than rudimentary changes to cup size. If you want a large, strong cup, you're toast.

     

    3) The cost comparisons are downright laughable. It's one thing to pay 20%, or even 50%, more; it's quite another to pay hundreds of percent more for the everyday brew.

     

    In my previous post, describing K-cups as a "fad," I didn't mean to suggest that it would disappear. I'm just suggesting that after the usual explosive early growth, two mitigating factors set in, which have serious economic side effects: 1) saturation starts to set in from the segment of buyers who are most likely to get caught up in the K-cup hype, and 2) there's an erosion in continued use from previous purchasers, who finally start doing the arithmetic and discover they're paying 3-4 times the cost of their usual cup of coffee, and not even getting as good a cup of coffee, to boot.
    3 May 2012, 09:36 AM Reply Like
  • BadCop_NoDonuts
    , contributor
    Comments (482) | Send Message
     
    all pretty freakin' obvious. More evidence that we all have to watch out for the tendency to be "religiously" bullish OR bearish. A prudent investor listens to all arguments.
    3 May 2012, 10:02 AM Reply Like
  • wally1200
    , contributor
    Comments (279) | Send Message
     
    quit going there long time ago / highway robberey
    4 May 2012, 12:31 PM Reply Like
  • clwr3
    , contributor
    Comments (2) | Send Message
     
    Wow! I'm impressed with the above analysis. I wish I had all your insight when I bought into Clear Wire.
    3 May 2012, 10:06 AM Reply Like
  • sourdo
    , contributor
    Comments (203) | Send Message
     
    I bought a kcup brewer. I at first thought it was a great idea, but in reality it is a dud. Expensive, tiny cup of coffee that costs over a dollar a cup. The directions call for using bottled water, more cost. Then the machine plugged up, I had to dismantle it to get it to work, a pain in the ass and beyond most people. I finally sold it for half what I paid for it. Two weeks after that the gal I sold it to called to tell me it quit making hot water. What a POS! Putting aside any business and stock info I could see the demise of Green Mountain in what I see as nothing more then a fad that flopped.
    3 May 2012, 10:19 AM Reply Like
  • $CLU
    , contributor
    Comments (207) | Send Message
     
    I read some of these comments (both bullish and bearish) and wonder what percentage of people are "Talking their book".
    3 May 2012, 11:54 AM Reply Like
  • soleprop
    , contributor
    Comments (425) | Send Message
     
    Green Mountain and Keurig -- what a joke. "Way to brew, babe!"
    3 May 2012, 12:15 PM Reply Like
  • wally1200
    , contributor
    Comments (279) | Send Message
     
    Trefis has a price target of 82 /
    3 May 2012, 12:51 PM Reply Like
  • wally1200
    , contributor
    Comments (279) | Send Message
     
    wonder if they revise that down
    3 May 2012, 12:52 PM Reply Like
  • Tom Guttenberger
    , contributor
    Comments (717) | Send Message
     
    This seems like overkill, but I guess that is knife catching for ya!

     

    Like Paulo says about AMZN, why not punish other overvalued companies similarly? Closer to this story - DNKN's valuation is a joke.
    3 May 2012, 02:21 PM Reply Like
  • Paulo Santos
    , contributor
    Comments (17773) | Send Message
     
    It's overkill, but very scary ... one starts thinking about all the allegations of accounting impropriety and whatnot. Real scary. Also, it would seem a good many institutions were coordinated on the long side of this and all decided to get out at the same time.

     

    Makes one think if the same coordination isn't happening in AMZN, given that there are news of 75% plunges in Kindle sales and the stock acts as if it were nothing.
    3 May 2012, 02:25 PM Reply Like
  • BadCop_NoDonuts
    , contributor
    Comments (482) | Send Message
     
    now yer talkin'! The AMZN long thesis is a house of cards. Short AMZN
    3 May 2012, 02:26 PM Reply Like
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