Tag Archives: short

SodaStream (SODA) – ohh no, what did we do?

Only on Wallstreet is it possible to be 100% wrong, yet be right at the same time. How? By using your infinite leverage to short a stock into submission. How else can you explain a stock falling over 60% in a few short months, while beating earnings estimates and raising guidance. That company was SodaStream(SODA), hitting a high of $79.21 in August of 2011, only to plummet to 27.60 in Nov of 2011. When a stock only has 14 million in the float(free trading shares), it can trade very volatile, meaning big swings up or down on low volume. All it takes is one hedge fund who wants to bet against the SodaStream(SODA) story, to short the heck out of the stock, and with a 14 million share float, it wouldn't take much. I wonder when they reached the point of no-return. It may have been mid-August 2011, when the total short interest was 3.6 million shares, meaning of the 14 million float, about 25% was being held as a short position. Fast forward to 2012, where the latest short interest report shows 7.5 million shares short, or over 50%. Based on SodaStreams(SODA) average trading volume, it would take over 8 days for the shorts to cover their position, and would result in a massive spike in the share price.

SodaStream(SODA) is a great growth story, and the market loves a great growth story. Look what happened to stocks like Netflix(NFLX), Green Mountain Coffee Roaster(GMCR), or Priceline.com(PCLN). Those who had the foresight and trading instincts, were welcomed with huge returns. We are not saying SodaStream(SODA) is going to move 1000% from here, like NFLX did from its $30 range it held for years. But we are saying, there is potential for a nice swing to the upside from fridays close of 44.46. Why, considering it moved almost 10% on thursday and friday? Well because we think the company let the cat out of the bag on it's forecast.

CNBC had Michelle Caruso-Cabrera on the air about SodaStream(SODA) last week. Sure having SODA on CNBC may account for some of the spike, but the rest of it may be the result of this small statement from the company:

We manufactured three million soda makers in the last year. in 2006 we did about 400,000. We do 400,000 in a month now. So something's going on. There's a revolution happening in the beverage world.

I am not a mathematician, but 3 million units in 2011. And now 400k per month times 12 months = 4.8 million. So more then 50% growth on just the Soda Makers. Sure beats the 36% growth they were looking for in the Q3 outlook? If you were short 50%+ of the float, wouldn't you be nervous and start to cover? Looks like that started to happen on Thursday and Friday. And I wouldn't be shocked to see some volatile trade going into Tuesday and Wednesday.

We are looking for SodaStream to head towards $47+ into earnings.

We are currently holding March 45, 47.50, 50, 55, and 60 calls.

You ever hear of SODA(SodaStream International)??

We have written about this company a few times over the past month.(Here and here). SODA (SodaStream) was a $70+ stock in the summer, and has succumb to the growth stock syndrome, where skeptics and short sellers rip the stock apart.

It seems SODA(SodaStream) has found its short term bottom, and is ready to break to the upside. Here is why:

1. It's a great product. I remember early last year, standing at the line at the supermarket, listening to some ladies discuss what was on their Netflix Queue. It was then that i knew Netflix had hit the mainstream. Have you ever tried SodaStream? Ever saw the product. Ever spoke to someone who has used it... well it isn't a "has"... because they use it everyday. The last hurdle for SodaStream in the U.S. is Walmart. But they won't need that to continue growing.

Where you can get SodaStream:

2. Soft Drinks account for $57 Billion in revenues in the  U.S. in 2010.  For 2010 SodaStream did just $213.2 million in revenues and expects continued growth for 2011. Growth? There is quite a bit of opportunity to grow in just the U.S. , considering a large percentage of their business is international right now. Anyone stop by their local Target or BestBuy and see a SodaStream Demo? Thats right, reps doing in store demo's. Last time I saw that from a beverage machine, was a few years back, and it was the Keurig. Nice read on that here. 

3. The Short interest in the stock is 34.1%. It almost seems like folks are so set on making their trade "right", that they have shorted the snot out of it to make sure it happens. Well it seems like their short term success, will be our short term glory soon. It would take over 7 days for folks to cover their shorts. Just needs a spark.

4. SodaStream announced a partnership with Kraft, where some of Krafts top brands like Country Time Lemonade and Crystal Light will be available for the SodaStream in-home carbonation system. I would say it's a very good sign, when a company like Kraft takes interest in your products. Well it's more then taking interest, when they make them available for use on your own product.

5. As of the close on Feb 13th, 2012, SODA (SodaStreams) Marketcap was $728 million. A paltry number for a company that grew over 20% YOY, has zero debt, and is just getting it's footing in major markets. Over the past week, there has been chatter of Kraft acquiring a stake in SODA(SodaStream). It makes sense when it would take $1 billion or so to gain a product that will help drive sales in other areas.

6. It looks like SodaStream did very well this holiday season. If the website traffic was any indication, Quarter 4 should be very nice!







With everyone worried about the environment, SodaStreams technology is a huge "green" product, as people just reuse their bottles, as opposed to recycling (hopefully) or throwing out their Coke or Pepsi bottle.

Bottom line, SodaStream seems to be a very attractive company, at a rock bottom price. There is quite a few ingredients that could lead to a 30%+ move over the next few weeks. A Walmart Deal, Kraft stake or buyout, or Huge company Earnings report on Feb 29th. Either way, we think she heads higher.


Disclosure: We currently hold the FEB $45 Calls and March 50 and 55 Calls

SINA (SINA.COM) / GMCR (Green Mountain Coffee Roaster, Inc.)

Seems like all the beaten down, piece of shit stocks want to run today. SINA (SINA.COM) is a beaten down china ADR that is getting some legs on the FMCN news today, just like all the other ADR's. SINA (SINA.COM) does have a tendency to explode after being beaten down, like it did in October. SO play accordingly.



GMCR is continuing its breakout today, after getting an afternoon pop yesterday. Looks like a combination of some NPD rumor news, as well as short covering??? Hate the stock, but play the play, and GMCR can be profitable trading on both sides.

Volatility is an option players friend!

Happy Trading!

FSLR – First Solar under $40 on lower guidance

First Solar issued lower guidance for FY '12 this morning and the market responded,  giving the stock a 20% mohawk and taken to the proverbial WOODSHED.

We have been all over the demise of the solar sector, and todays news is only the tip of the iceberg : (LINK)


Quite honestly, last weeks asset sale should have been a clear signal to get the heck out of the stock if you were long, and go short/puts.:
As of today, Sunpower (SPWR) and First Solar(FSLR) remain the last two solar companies trading above the dreaded $5 level. It will only be a few more months before our bold prediction comes to fruition : (LINK)

Its trades like this that can make your year , and ensure your days are spent trading stocks and not flipping burgers.