Avoid losers and the winners will take care of themselves.

The point of the Triple Crown of Crap Index was pick the 3 worst public companies I could think of and make them into an index. The defining trait of a game of skill is whether or not it can be lost on purpose. Twitter, GoPro and FitBit were specifically chosen for to lose.

They didn’t disappoint. TWTR, GPRO and FIT have lost an average of 40% since the start of the year. All three stocks have been mercilessly beaten almost without interruption, and for very good reasons.

Some companies just shouldn’t be public and these are three of them. GoPro has dropped $6.6b in market cap over the last 52-weeks. That’s enough to buy 150 of at the party yachts CEO Nick Woodman bought for himself last Christmas.

FitBit is staggering to the wire and looks set to “win” Q1 with a 55% decline. Twitter and GoPro are both down about 30% with only one full day of trading left in the quarter. Whichever stock finishes closest to flat will be replaced in the Index starting April 1st.

You may make your case for the new entrant in Q2’s Triple Crown of Crap Index in the comment section below.

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Shares of GoPro are off as much as 10% today and 15% for the week. The drop comes at the end of a month-long 45% jump that effectively snuffed the hopes and dreams of any bears hoping to ride the one-trick company to zero.

By way of answering many, many questions on why I wouldn’t short a POS like GoPro  I give you the stock’s 5-day chart:

 

GPRO is off 15% in the last 2 days. Shares had jumped 45% since February 4th. Year-to-date GPRO is now down 30%. Calling the turns is insanely hard. Catching the middle of moves can work… right up until it doesn’t. Like today.

Day-trading a pig-show like GoPro is a full-time job. It costs money to short, either borrowing costs or put buying. You can swing trade, jumping in and out to catch the middle of moves but that’s less a trading strategy than playing Russian Roulette with your money. You may go on a great run but the downside is severe.

 

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GoPro is so bad it’s now apparently impolite to discuss management candidly. Nick Woodman, proud legacy member of the SV CEO High School took home $284 million in 2014. He cashed out  in the IPO and took out more when he and his wife, Jill, exploited a loophole in the GoPro IPO terms to dump over $300 million in shares via a foundation to fund causes TBD.

90% of the shares sold in GoPro’s secondary offering came from insiders. They got $72.38 a share, about 9x higher than where the shares are 14 months later.

Woodman is the affable face of executive incompetence. If you aren’t going to be critical of him you should simply not do financial commentary. Martin Shkreli didn’t cost you any money but he’s an easy target. GoPro and Yahoo are investment death pits run by a Ty Webb and Regina George. Guess which exec is getting pounded today?

On Christmas Eve I did a piece on why CEO behavior matters. I focused on GoPro and Yahoo.

 

I’m not sure if the piece is rude. I’m certain it was correct. Yahoo and GoPro have dropped 18% and 50%, respectively since I recorded it. I work for you. I take it very personally but criticisms aren’t necessarily personal. It’s business. I think executives matter to your investments so I talk about them, good and bad.

Being CEO of a public company means answering to the public. That’s why they get the big money. If execs can’t take the heat they should take different jobs. I’m going to keep doing mine.

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Mistakes were made. Promises were broken. It happens, GoPro. We’re all just people, doing our best and trying not to lose $9b in shareholder money.

We all want to move forward, GoPro. But you need to help us… Help me… Help you.

It’s time to say you’re sorry, GoPro. You don’t even have to mean it. Follow this exact script, right down to the accent. Don’t be selfish with the foppish. Give it out, even as you stammer.

Sell it hard and a PE firm will scoop you up for $6.

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GoPro announced a top and bottom line miss after hours, sending the stock down more than 20% to $11.23. Shares are now down nearly 80% in the last 6 months.

Everyone keeps telling me the CEO is a great guy and GoPro is laying off 7% of its workforce. So I’m trying to be sensitive and respectful when I say there’s a super good chance this company gets sold to Cisco for about $2 a share unless they throw out the entire management team and start from scratch.

GoPro essentially missed the Christmas season this year. It released the HERO4 Session in July for $400. In September it cut the price to $300 while missing Q3 estimates. In December it dropped the HERO4 Session to $200, making it effectively the same price as GoPro’s entry level offering.

Customers responded by video taping stuff with their phone like normal human beings.

It’s the little touches that reveal a company on the brink of total collapse. Take for instance the way GoPro tried to spin the margin shortfall resulting from all the above discounts. Rather than just own the number GoPro invented a Non-GAAP world where it was able to sell all those HERO4 Session’s at $400. In that world GoPro cleared a cool 45% on every camera sold.

In the real world margins were considerably worse.

It seems like a small thing but GoPro is making a gimmick consumer product. Its entire year revolves around having a strong presence during the holidays. GoPro knew it had a problem with the HERO4 last summer yet the company was still screwing around with price points into December. The non-GAAP number here is an insult. It’s a cut-and-paste from some business model that hasn’t existed since last June.

I hope you’re not long shares. If you are I’d consider reading up on the history of companies like Sunbeam and Iomega before doubling down.

 

 

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Every rally needs a “tell”. Apple and Disney are fine but if you want to check the Animal Spirits of the market look to the beaten down crap.

Here’s a chart of Twitter, FitBit, GoPro and Shake Shack over the last 5 days. Don’t enlarge it in front of the children unless you want them to have night terrors for 60 years.

 

 

4 stocks that lived and are now dying by hope. In a screaming, stupid, straight-up 10% face-ripping rally you’d want to own at least a few of these.

Here’s those same 4-stocks as of 8:14 hippie-time:

 

All way off where they opened. GoPro is a rat-infested pit of despair. You couldn’t sell enough GoPro to bid for the Silence of the Lambs house without dropping GoPro 10%. there is no demand.

That’s both rational and a warning sign for this bounce. Don’t be piggy.

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I don’t know why oil is down 6%.

I could make up lots of reasons. I’m a trained broadcast professional. I have an MBA from Stanford. I am practiced at the art of spouting best guesses with a confident, strong voice.

But those reasons don’t actually matter. Oil shouldn’t move 6% in one day. Oil isn’t Under Armour. It’s not FitBit. Crude should move in pennies. If oil is down 6% in one session it can only be because something in the marketplace is broken. Whatever it is if it can take oil down 6% it sure as hell can trash my shares of FaceBook.

Bear markets are hard. They take money from everyone. It’s too late to short and too early to buy. If you’re long a ton of broken GoPro et al and it’s keeping you up at night just sell it until you can relax. Otherwise, from where I’m sitting the best trade today is nothing.

 

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