“Do What You Love” Is a phrase we may hear often. But when it comes to the markets, investing in what you “love” may pull you into losing hundreds or even thousands of dollars. Just because you like shopping at a particular retail store, doesn’t mean that the company will survive in the stock market. Let’s look a couple examples of companies who are failing miserably on their balance sheets.
GPRO (Go Pro, $5.55), a company that engages in manufacturing cameras and camera accessories (wearable sports camera) is a very well known company that people love. Advertised with several players from the NFL, GPRO used to be on the rise, however from the highest stock price climb of $86 (in 2014) has now descended to a penny stock of $5.55. As well as an operating income of a negative of -$163,000,000 and net income of negative -$183,000,000, it’s nearly impossible to continue to see this company as a long term investment if financial changes aren’t a priority.
LB (L Brands, $36.10), is a popular company that engages in ownership of famous retail companies known as Victorias Secret, Pink, Bath&Body Works, La Senza and Henri Bendel. From a stock drop price of $20 since 2015, LB is losing free cashflow and has made a decline of almost 30% in opereating cash flow from 2017. From recent sexual-bias ads that are unapealing to new investors, LB may need to make some changes in order to improve positive cash flow returns.
These are only two of of many companies who have poor managibility of their finances and business operations (Tesla, Southwest Airlines, General Motors and more), . Any company can have a great product to sell, however if they cannot manage their finances, it is doomed to total debt. But good marketing and a pretty desplay can sell anything, this is a case that shows you that loyalty dosen’t always win.