Shares in Sodastream, the Israeli maker of fizzy drink machines, crashed in pre-market trading after the company reported dismal preliminary earnings for the third quarter.
Sodastream said it expects revenue of $125 million for the quarter ending 30 September citing "weak demand" from US consumers looking for healthier alternatives.
Analysts expected revenue in the region of $154.4 million. The stock fell as much as 16 per cent to $23.15.
"We are very disappointed in our recent performance," Chief Executive Daniel Birnbaum said in a statement.
“We have not succeeded in attracting new consumers to our home carbonation system at the rate we believe should be achieved.”
The company has lost almost half of its market value this year after reporting two consecutive quarters of losses. SodaStream is battling a shift in consumer trends in the US, its biggest market, with customers looking for healthier products with fewer calories.
In response, Birnbaum said the company has already taken on a strategic shift towards health and wellness that will "resonate more strongly" with consumers.
The company also hinted at a major restructuring, vowing to provide further details later this month when it reports third quarter earnings. Earlier this year, media reports speculated the company is looking at several options including going fully private or selling a significant stake to a strategic entity.
An Israeli newspaper also suggested Pepsi Cola had made a $2 billion offer through Goldman Sachs for SodaStream, which was later denied by the American drinks giant.
SodaStream machines allow consumers to make their own flavoured fizzy drinks at home and counts Hollywood actress Scarlett Johansson as its brand ambassador. Johansson came under intense scrutiny for choosing to end her collaboration with Oxfam in favour of her SodaStream contract, which operates in the West Bank.
The 30 Second Briefing: SodaStream
What’s this about the fizz coming out of SodaStream shares?
The Israeli maker of carbonated drink machines warned its sales are faltering and said its third quarter earnings at the end of the month will not meet expectations. Shares tumbled 20 per cent on Nasdaqin the US, to an all time low.
What’s the problem?
It hasn’t posted a rise in quarterly profit in a year. It has been hit by the rise in demand for healthier drinks and the fall in desire for soda in the US – its biggest market. The company expects revenue of $125m for the quarter to the end of September, below the expected $154.4m.
So what can it do?
It has put itself up for sale. It is planning a major restructuring with options including going private or selling a significant stake.
We have already heard chatter about a sale right?
Yep. In April it was reported it was in talks to sell a stake of up to 16 per cent stake. There were unfounded rumours PepsiCo might have been interested but this was denied. Then Bloomberg reported in July that it was in talks with an investment firm. Investors expect an update on its plans later this month.
It has been a tough year.
Yep, it faced criticism when protestors boycotted the brand due to it owning a factory in an illegal settlement in the Israeli-occupied West Bank. Film star Scarlett Johansson was involved in the row after she quit her role of goodwill ambassador for Oxfam due to her endorsement of SodaStream.