Green Mountain Coffee Roasters Inc. shares declined today by close to 10%. The Vermont based coffee roaster, seems to have lost a lot of faith from investors, in less than a day after one of its major competitors, Starbucks Corporation (NYSE:SBX), announced that it will begin selling its first-ever single-cup coffee machine, an area of the market Green Mountain has long dominated, noted Wall Street Journal. Nonetheless, as you will find out later in this article, investors knew long ago, that this was going to happen, thereby throwing a big question over today’s decline.
The news by Starbucks Corporation (NASDAQ:SBUX) will sound like the typical idea hijacking, as Green Mountain had planned to launch a single cup coffe machine later this year, or early next year. Nonetheless, Starbucks has chosen to offer more than what Green Mountain had been moved to offer in its own version, by providing lattes and espressos, as well as brewed coffee, in its new offering labelled, Verismo. Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR), on the other hand, which came up with a latte maker called the Vue in February, is planning to offer a one-cup espresso machine in the next three to five months.
It is also noted that when Starbucks Corporation (NASDAQ:SBUX) revealed its plan to offer the single cup machine back in March, Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) shares, again succumbed to the pressure, plunging down sharply, part of which has contributed to the stock’s 38% decline YTD.
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However, Green Mountain has also been on the back foot, in several internal processes, as featured in one of our articles, declining to address some accounting irregularities. The stock is indeed experiencing some of the darkest times since going public, and investors are perhaps wondering, whether it has any chance of taking on additional pressure from competitors.
The above highlighted irregularities have prompted the Securities Exchange Commission (SEC) to dig into the measures taken by Green Mountain, with regard to accounting procedures, while hedge fund manager, and value investor, David Einhorn of Greenlight Capital, is noted to have shorted the stock, (NASDAQ:GMCR).
The reports submitted to the SEC, were noted to show signs of fraud, and despite the fact that Green Mountain refused to admit the accusations, it later expressed its desire to use better forecasting methods, in a bid to improve on its credibility before the eyes of investors.
Shares of Starbucks Corporation closed today at $51.19, up 2.15%. Shares of Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) are up 1.11% in after-hours trading.