« Index Mutual Funds or Exchange-Traded Funds? How About Both! | Main | Scott Adams Cracks Me Up »
Crocs: The Beginning of the End?
By JLP | November 2, 2007
Crocs (CROX), the company that makes those UGLY (but comfortable, so I’m told) shoes was a darling of Wall Street since it began trading in February 2006 at $30 per share. The shares went from $30 to $90 in about a year and a half, split 2-for-1, and kept on rising until yesterday. That’s when the bottom fell out. The stock closed at $74.75 on Wednesday and opened yesterday at $53.60 and ended up closing yesterday at $47.74, down over 36% in one day. OUCH! According to today’s Abreast of the Market ($) column in the Wall Street Journal:
Crocs tumbled 27.01, or 36%, to 47.74, its largest fall ever and the Nasdaq’s biggest percentage decliner. Quarterly profit more than doubled on continued demand for the shoe company’s clunky, plastic, brightly colored clogs. But sales weren’t quite as stratospheric as some had hoped, nor was the company’s fourth-quarter profit outlook, sparking fear that fever for Crocs is cooling.
I have never cared for this company as an investment because it always seems that companies like this shoot straight up and then straight back down again once the hype wears off. Yesterday may have proved the beginning of the end for Crocs ride. Once traders figure out there’s no momentum there, this stock will most likely end up in the trash bin. No, I’m not a stock expert. This is just MY opinion.
Is Crocs a good company? I have no idea. I think this was much less about it being a good or bad company and much more about momentum.
Topics: Business News, Investing | 11 Comments »
November 2nd, 2007 at 10:47 am
I need the major problem with Crocs is that they sell knockoffs for like $5 at Walmart. Eventually they’ll be generic Crocs everywhere, and people won’t really care who makes them.
That plus I think Crocs are a touch on the trendy side, and not necessarily a staple in footwear.
November 2nd, 2007 at 11:42 am
Like Uggs, Crocs are a trend–so I wouldn’t see them as a sound investment vehicle. If one were in a risky mood, then buying stock as soon as they became really popular might have been a good move, with the intention to sell once it reached a certain point. But I’m too risk-averse.
November 2nd, 2007 at 12:29 pm
My wife bought some Croc sandals (not the regular Crocs) while we were in Hawaii this summer and she loves them. Really comfortable and better looking. But I agree with the others – paying that price for what is basically molded foam rubber seems silly. They must cost all of $3 to produce.
November 2nd, 2007 at 12:35 pm
Crocs are a trend and thus have little long-term investment potential. If the company branched out and advertised more products than just the Crocs, they’d have a legitimate alternative as a shoe company once the Crocs fever dies down. Instead, once the demand for Crocs goes down, the company’s future will not be great and the stock price will continue to fall until some equilibrium point is reached. Investing now would be quite risky. CROX should never have been looked at as an investment vehicle, only as a trading vehicle if you are a risk-taker.
November 2nd, 2007 at 3:36 pm
Exactly… Crocs are more of a trend. And their stock was obviously a bit of hype. I haven’t researched the company at all, but if they’re a good company I’m sure their stock will stabilize. But if these crocs are all they’ve got, then that’s it. But as Sam said, his wife got a pair of regular Croc sandals and she loves them. So at least they’re not relying purely on those ugly foam things.
November 2nd, 2007 at 4:54 pm
Buy the shoes, not the stock.
November 3rd, 2007 at 7:28 am
[...] JLP talks about the falling fad of Crocs. [...]
November 3rd, 2007 at 7:29 pm
Buy the shoes and wear them for a week… You’ll always want to have at least one pair around… Plus, every child under the age of 12 has a pair…
November 4th, 2007 at 1:03 am
[...] All Financial Matters questions whether investors are thinking that Crocs™ are crocks. [...]
November 4th, 2007 at 9:49 pm
The profit margins on their shoes have to be tremendous, but eventually this will be a fad that blows over. The stock was clearly overvalued and is now coming back to earth.
April 16th, 2008 at 11:18 am
[...] back in November when I wrote Crocs: The Beginning of the End? Well, the stock was trading at around $47 then (after being as high as $75). Now it is currently [...]