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The Company develops, produces, markets, licenses and distributes premium beverages and related products.
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AresFinancial (99.67) Submitted: 12/07/07 5:43 PM : Start Price: $6.29 JSDA Score: 48.98
Every time I see Jones Soda in a store, I say a little pray for fools, who bought this stock. Dear CAPS gods, Please give the investors of Jones Soda a billion REAL DOLLARS to lose to people like myself, who have some BASIC understanding of the stock market and promise not to waste the money on a ridiculous stocks like JSDA. Ahhhhhhhhhhhmennnnnn....foooooolllll oooonnnnn...
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clanza875 (34.46) Submitted: 12/10/07 4:44 PM
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Yeah its only up over 30x in five years.
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AresFinancial (99.67) Submitted: 12/10/07 8:14 PM
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I did not buy it five years ago. I went short three/four months ago. Pump and dump. Guess which part of the formula we are on now?
btown819 (72.99) Submitted: 12/18/07 10:23 PM
Are you confident enough to keep your current thumbs down call on JSDA indefinitely? If your thumbs down call is for any more than two years, I think you would be very wrong. This is an attractive price for this business, despite short-term uncertainty. Thumbs up on JSDA.
StKitt (99.26) Submitted: 12/19/07 2:28 PM
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Who makes indefinite calls on high volatility stocks like JSDA?This is one you can work from both sides for plenty CAPS points.But it's far too volatile to put real $$ into.
btown819 (72.99) Submitted: 12/19/07 8:33 PM
I do. I can't decide when Mr. Market goes crazy, but I can decide when it is a good price to buy, and when it is a good price to sell. This business has a lot of potential and has been slowly putting it's ducks in a row. This should become more apparent over time and Mr. Market will eventually recognize it. CAPS is for entertainment, the stock market is for investing.
AresFinancial (99.67) Submitted: 12/19/07 11:29 PM
In CAPS I can wait indefinately, a company with a P/E of 228 or 328?hahahahahahahahttp://finance.google.com/finance?client=news&q=jsdaI have seen plenty of soda companies come and go. Go to your local 7-11 and count the number of beverages available. Hundreds Beverage sales is a highly competive space. These soda companies come and go. TAB? RC? Snapple?, Vanilla Coke, Pepsi Clear, Dr Pepper(My dad invested in Dr Pepper:)Real money in JSDA is a dangerous Gamble. Hedge funds love a story to draw in retail investors and then BAM!!!! CROX em!
btown819 (72.99) Submitted: 12/20/07 10:03 PM
Talking to you is like talking to the wall. abitarecatania, you aren't the only genius who realizes that the beverage industry is ultra competitive with low barriers to entry. If you had no idea about that, then you have no business investing in this stock because you have no idea what you are buying. You cite scenario after scenario [which are true scenarios], yet you fail to demonstrate knowledge of the drivers that separate the businesses of Coke and Pepsi apart from the rest. Some of these same drivers are similar to drivers that have made Hansen's Monster energy drink successful even in the face of so many competitors in the ultra competitive energy drink sector. Five years ago everyone was probably saying similar things about Monster that you say about Jones today. "If it were profitable, Coke and Pepsi would just copy it and squash it like a bug. 99% of entrants fail." That didn't happen, but most people don't clearly understand why. I do, however, commend you on advocating against investing in something in which you do not have a great understanding. 99% of the time your logic is going to be right. My research tells me this business exhibits characteristics of that small 1% that won't end up failing miserably.
AresFinancial (99.67) Submitted: 12/21/07 7:05 AM
Take a hint? 1. CEO just quit 06Dec072. The P/E = 254 to 320 - lol3. The stock fell from $38 to $5.68 - lol4. The institutions are dumping: http://moneycentral.msn.com/ownership?Symbol=JSDA5. The insiders are dumping:Total buy: $85,249, total sale: $9,018,621, net total: $-8,933,373.http://www.secform4.com/insider-trading/1083522.htmSell this "pump and dump".
dwot (100.00) Submitted: 12/26/07 11:28 AM
What a good laugh reading the comments here.They have switched their business plan and they have a negative profit margin in the new plan. They are essentially selling all of their syrup at a loss and this is where their "growth" is coming from.This is a highly, highly, highly speculative gamble that they will get the degree of market penetration and demand to give them some price leverage, of which they currently have none, before they use up all of their cash reserves and either have to try and raise more money through equity or debt, or become insolvent.Right now their burn ratio through their reserves is highly unsettling, and having to defend a lawsuit is simply increasing that burn ratio.
btown819 (72.99) Submitted: 12/28/07 1:48 PM
Dwot, I like a lot of the stuff you write but your arrogance is insulting. You are not the only one who can read a financial statement here, so please stop being so condescending. First of all, they are making profits on their syrup and other products. They are not currently making profits on their operations. They also have a strong balance sheet to finance their short-term operations as one would expect after an equity offering and a expansion of business operations. You could indeed characterize it is "speculative" because it is more about future, rather than existing business. Also, management has done a poor job communicating expectations to the investment community, particularly when the least amount of fluctuation in any single line item of their income statement [on a YoY basis as of Q3] fluctuates no less than 15%. Almost anyone would be hard pressed to find themselves comfortable with any business with that much fluctuation in their financial characteristics within a one year period, regardless of what company we were talking about.
dwot (100.00) Submitted: 12/29/07 12:28 AM
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Oh please, I've gone back and looked at this one's financial statements back to 98. They are full of promises they never deliver on. The numbers on their expansion are awful and unless they get some pricing power, which they'd don't appear to have now, they are doomed.
btown819 (72.99) Submitted: 12/29/07 1:01 PM
I'm not sure which promises you are referring to, so I can't comment on that one. They do have pricing power, but maybe it's not the kind you are thinking of. If you are thinking of "pricing power" in terms of how Coke or Pepsi do it, you are right. Jones doesn't try to compete head to head with Coke or Pepsi in that regards. Strategically, it would be a fatal error. Instead of using their bargaining power over retailers to sustain the company's high margins like Coke or Pepsi, they align themselves with retailers and offer them higher profit margins than Coke or Pepsi. This is a good distribution move because it makes it attractive for retailers to still distribute Jones even if they only get a fraction of the sales volume as Coke or Pepsi does [which is the case]. It also means that Jones more directly competes with "private label" brands than they compete directly with Coke or Pepsi. Deals with the professional sports teams likely offer no short-term financial benefit. Jones had to pay in advance for every dollar they would likely have received from the benefits of the sponsorship. Ultimately, what they have purchased is leverage in the distribution channels. This leverage does not appear overnight as soon as they sign on the dotted line. Things look promising in Seattle... thanks to some of my crazy Starbucks lovin' family in Seattle, I know that things still look promising on the distribution front despite what the "experts" on Wall Street think... It will take some time to show up in the financial results, so don't be surprised it still looks gloomy now. If you stick solely to what is published in the 10-Qs/10-Ks, you aren't likely to see evidence of effective strategy until after it has been implemented. History does have some bearing on future performance [particularly with large caps], but I wouldn't give it too much credit in this case. There are plenty of cases where both historical data has been a great indicator of future performance and where it has failed miserably. Dwot, I realize we don't see eye to eye but I have to admit that I have great respect for your opinion and the lengths you go to dig a little deeper beyond the surface. I only wish more people here would do so. Happy Holidays.
dwot (100.00) Submitted: 12/30/07 12:55 AM
Dang, I so did not want to look at this one again. Not only to I feel like it is a money pit for investors, I also feel like I have looked at it enough to declare any more time with it is also a waste of time. However, I just don't remember the specifics of why this one pulled my "yuck" chain so hard other than the declining margins.Last year they got $10.2 million for 716,000 cases. This year they get $13 million for 1,565,000 cases, or only an extra $2.8 million for an additional 849,000 cases. This has nothing to do with the marketing costs you speak of but about the margin they are getting for their product. That more than a doubling the amount of pop they have out there yet only increasing the revenue by about 1/4.They have an extra $2.4 million for promotion, selling, general and administration costs. That doesn't count the $1.3 million for promotional allowance and slotting fees.They have a tax benefit to reduce the real loss. Those positive tax benefits mislead investors every time. They simply cause the true financial problems to be understated. Interest is way too much of their earnings. In this case without that benefit the tax loss and interest the true loss from operations is about 10c/share, not 6c/share. They have way too many strikes against them and now they have a lawsuit to defend as well.
btown819 (72.99) Submitted: 12/30/07 1:05 PM
That's not declining margins. That's declining gross sales price per unit sold. Concentrate offers higher gross margins than their bottled business, but subsequently less revenue because it takes less per dollar in sales of concentrate to make the same amount of finished liquid product. When lumped together as you have calculated, on the surface it may look like declining margins, but that is not the case. Of the 1,565,000 288 oz equivalent finished product cases sold in Q3 2007, 677,000 cases were attributed to concentrate used to produce product in 12 oz aluminum cans. With a lower selling price per unit of finished product for the 12 oz canned products, it is no surprise that overall revenue increases at a slower rate than finished product case sales. This is further supported by finished product sitting on the shelf at the retail level. Glass bottled products are more expensive and bottled in-house by Jones. Thus, raw costs of more expensive glass are included in the process and eventually get pushed along into the sales price and subsequently the revenues. A 4-pack of 12 oz glass bottled product typically retails for around $3.99. That translates to a $23.94 sale price per 288 oz case equivalent [at the retail level]. A 12 can fridge pack of 12 oz aluminum cans typically sells for around $4.29 - $4.99 at retail. That translates to $8.58 - $9.98 sales price per 288 oz case equivalent [at the retail level]. Assuming their aren't any significant margin differences between when Jones sells vs the end retail level, this further supports a lower gross selling price per unit of finished product, not declining margins as you've interpreted.I agree that SG&A costs are something to watch. Of the promotion and selling costs, $2.9M was spent on advertising in Q3 2007 vs. $1.8M in the prior year [excluding reductions in revenue and slotting fees]. It's hard to tell where all of that was spent on... other G&A costs ballooned which is of some concern. It is unclear how much, if any was related to upcoming product launches or expansion. I agree on the tax benefit being a notable factor... but that is something investors should know as it's clearly stated in the financial statements filed with the SEC. I don't understand how you dislike that Jones earns a lot of interest income, yet when the company starts spending the capital that generates the interest income, you dislike that as well. Is it just that you do not like non-operating income in general? What situation would you not dislike? As for the lawsuit, that has little merit and the risk is relatively low [excluding the fees]. Most of the lawsuits are for compensatory damages related to loss in stock price during the period. Risks specific to the launch of cans to retailers was specifically written in the 10-Q/K and Jones is already paying a hefty tab for slotting fees which will help to ensure product placement on the shelf. A branch of the SEC has already closed an informal investigation into Jones Soda after these allegations were made. The most costly part of the lawsuit is going to be for paying legal fees and other litigation related costs. Personally, I wouldn't be surprised if some "smart" hedge fund was indirectly related to at least one of the lawsuits just to make sure the "bad" news gets out there and helps push the stock price lower... it's not illegal [as far as I know] to short a stock while simultaneously suing the company's directors even if it does seem to be "wrong". At least that's what I'd probably be doing if I ran a hedge fund and were a slightly more shady character. I agree, however, that most retail investors who purchased this stock were probably chasing a story and had no clue of the relevant potential pitfalls that you have mentioned. These same people who had no idea what they were buying as the price went up still likely have no clue what they are selling as the price goes down.
AresFinancial (99.67) Submitted: 12/30/07 1:19 PM
I feel like I am watching a midget wrestler (btown819) take on Chuck Liddell (dwot). Everyone knows how badley this will end, except the midget wrestler(btown819), who made the challenge. btown819 = owned btown819,Now send dwot a check for her continued analysis of this pump and dump stock / garbage stock. What do you know that the insiders/funds and former JSDA CEO don't?
btown819 (72.99) Submitted: 12/30/07 2:26 PM
Whatever floats your boat, abitarecatania. Imagine whatever you have to to make yourself feel good. This isn't always about being right. It's a process about discovery and understanding. The only discovering I'm doing when you talk is learning about who Chuck Liddell is.I'm not going to go over the economic benefits and disadvantages of gross selling price in relationship to gross margins with you... that is something you can learn on your own, just like anyone else should be able to do. There's nothing special or private about that information. Let's put it this way... if you don't like the "margins" on canned product, it will be even worse if they start selling concentrate for fountain distribution where the selling price could drop even lower! Revenue growth rate would decrease even more in comparison to sold finished product. How terrible that would be! For the sake of the longs, let's hope they don't start selling concentrate for fountain distribution.
dwot (100.00) Submitted: 12/30/07 7:31 PM
Reading your analysis makes me wonder...If 677,000 cases are for concentrate, the 888,000 were not, and that would suggest bottled growth over the 716,000 cases in the quarter a year earlier. That looks like 24% growth of the bottled portion. 24% growth on $10.2 million would be $12.65 million. But they only got $13 million of revenue for the 888,000 and the 677,000 cases combined.How is it that you don't think they sacrificed margins?This is actually what I noticed when I spent a lot of time looking at this one and that simply looks very bad, and I forgot about it until you reminded me...
AresFinancial (99.67) Submitted: 12/30/07 11:22 PM
btown819,In reference to Jones Town they say you have "drank the kool aid". We could we say in reference to Jones Soda you "drank the Jones Soda"? I think if you like Jones soda and want to buy some shares, I might buy it on valuation of P/E of 10 to 30. Or at $00.10 - $00.40 a share. Again, there are thousands of soda companies there is no reason to think that JSDA will be around in five / ten years. I recommend collecting Jones Soda bottles over the JSDA stock, at least you know the bottles will be around and there is a market for them.Here is a link: http://www.antiquebottles.com/links.html
btown819 (72.99) Submitted: 12/31/07 2:24 AM
You can't assume that just because revenue growth slows in comparison to the growth rate of case equivalents that margins have suffered. Looking at the cost of goods sold in comparison to gross revenues, there is some increase in COGS which would support margin compression. So yes, I'd agree with you that the bottled business is experiencing some margin compression. Considering they are now selling bottles to Wal-mart and Sam's Clubs, it makes sense that there is a bigger jump in finished product sales, but lower margins on bottles than in the past. Let's further clarify some things here. Dwot, initially on 12/26/07 you said "They have switched their business plan and they have a negative profit margin in the new plan. They are essentially selling all of their syrup at a loss and this is where their "growth" is coming from." I've mentioned that despite a net loss, they are not selling their syrup [i.e. concentrate], the new business, at a loss [i.e. gross profit]. Later on 12/29/07 you said "The numbers on their expansion are awful..." yet on 12/31/07 you are asking me "How is it that you [I] don't think they sacrificed margins?" The expansion into concentrate is not the bottled business. So to answer your question, I never claimed the bottled business didn't sacrifice margins. I said that the expansion/concentrate business didn't sacrifice margins. That also applies in general when both bottled and concentrate are taken together as a whole. In general, margins as a whole should not be sacrificed assuming a certain level of concentrate sales.The point that I have been trying to get across was that concentrate sold for production of 12 oz cans is the newer line of business with higher margins that will be the primary driver of the potential growth for the next few years. Getting all bent out of shape because the older lower margin bottled business is having margin compression issues isn't as significant to the business as a whole. I agree it could become significant because profit margins in general aren't spectacular, but as the concentrate business grows, that should become less of an issue. There is also another benefit to the bottled business. While cans can also be customized, it is usually the labels on the glass bottles that really highlight Jones' brand and image. Getting them on the shelf to help promote sales of the product in general for stores that carry both products is worthwhile. I know on paper it looks bad because they may have to sell at a discount [or even a loss?], but if you are able to promote your brand while simultaneously cross-selling your higher margin canned product, it may not be a bad strategy. Some areas around the country are seeing end cap displays of Jones Soda products... that may potentially be worth something down the road even if it doesn't show up on the most recent 10-Q.
btown819 (72.99) Submitted: 12/31/07 2:38 AM
abitarecatania, I'd probably buy JSDA at $.10 to $.40 per share as well. With roughly $1 per share of cash on the books net of debt, barring any huge contractual penalties, the company would be worth more at it's liquidation value than it's quote price. Again, nice reference to the deceptive PE ratio argument. Makes a lot of sense when you suggest only buying a stock when it trades well below book/cash value, because that seems to happen all the time... Have any other practical valuation techniques I can use?
AresFinancial (99.67) Submitted: 12/31/07 1:58 PM
btown818,JSDA cash will be used up trying to get JSDA to market and / or trying to hire a new CEO."Have any other practical valuation techniques I can use?"For you, here are a few rules:1. If the P/E of a "no moat" company is three digits = sell2. If the CEO or CFO, quits, is fired, dies mysteriously = sell3. If dwot says underperform = sell4. If a pump and dump stock like JSDA gets dumped = sell5. If the insiders and funds dump high amounts of shares = sell
btown819 (72.99) Submitted: 12/31/07 4:12 PM
Hahaha thanks, Cramer. I'll really be worried when the company can't successfully hire a CEO with $28 million in the bank. I know CEO pay can be excessive, but come on... give me a break. It's funny, I was going to let you know that you should rush over to BIDU and warn them over there about your rules. Their CFO just died while on vacation this past week and the stock has had a massive run up in the last year into a triple digit PE. Sure enough, the most recent commentary is none other than you, abitarecatania, posting "Dead CFO on a company like this? = underperform" over on BIDU. I have to say, I found that quite amusing. Happy New Year.
AresFinancial (99.67) Submitted: 12/31/07 4:44 PM
Since we are doing humor and soda, I found a good ad, which might explain your over enthusiasm for this stock.http://www.capnwacky.com/rj/images/soda_ad.jpg?-I guess you were started early.... now go collect those soda bottles!Happy New Year!
btown819 (72.99) Submitted: 1/02/08 10:59 PM
Hehehe, nice. I'm running out of time to follow up with points on this one, but I think we can agree to disagree on this one. Believe it or not, I only drink soda occassionally... and I probably drink Coke products as much or more than Jones Soda when I do. I also think Starbucks is a great business, but I don't drink coffee [of any kind] more than a couple of times per year.I'd also like to point out that this company doesn't have a moat... but so do a lot of other successful companies that have been great investments. There was a point in time where even Coke did not have a moat. Coke, like many other companies, spent years of executing and implementing successful strategy in order to build the moat that they have today. All companies do not have to have moats to be successful investments, but many that eventually develop moats do start with great strategies that get executed successfully...
dejonese (36.79) Submitted: 4/15/08 1:08 PM
I'd agree with you at the $30's level. At $3, I think someone will buy it out. If not, their margins will return as they learn to cut costs and deal with recessionary consumer spending. Keep in mind they have very little LT Debt and enough cash to burn for a couple of years!!
