This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
$1 buys you full access to ALL of TheStreet's Subscription Services! Learn More

Peapod Calls Friday's 22% Selloff an Overreaction to Its 10Q Report

Peapod (PPOD) attempted Monday morning to stanch reports that the company is running out of cash. Concerns about Peapod's financial position sent the company's stock price plummeting 22% on Friday.

On Thursday, the Internet grocery service filed its quarterly 10Q report with the Securities and Exchange Commission, stating, "The company anticipates that existing cash and marketable securities may be insufficient to fund the company's operations and capital requirements for the next year and is currently evaluating financing opportunities."

But early Monday, Peapod announced it had in excess of $15 million in cash and marketable securities, "an amount it believes is sufficient to fund its operating needs into the third quarter of next year." At the same time, the company disclosed that it is in talks with potential investors to raise additional financing past 2000, with the investment bank Wasserstein Perella's assistance.

Company officials called Friday's selloff an "overreaction." "The company is currently evaluating a number of financing alternatives, which should position Peapod for a strong future," Bill Malloy, Peapod's new president and chief executive, said in a statement. "We are confident that additional financing will be obtained early next year."

Despite the attempt at reassurance, Peapod's stock fell 8%, or 15/16, to 10 3/4, in Monday morning trading. The company closed down 1 1/4 to 10 5/16.

One analyst shrugged off the news. George Dahlman of U.S. Bancorp Piper Jaffray, said, "On a 10Q, a company gives the most conservative position it can." Because the company is in start-up mode, he characterized the company's cash position as "hardly a surprise." He rates the company a strong buy and his firm has not participated in any underwriting for the company.

Added Ellen Baras of William Blair & Co.: "This is not a surprise. Anyone who saw their earnings last week would have seen that their cash position had dropped." She emphasized, "What's important now is, can they get the money? And at what terms and at what price?" Baras rates the company a hold and her firm was involved in Peapod's initial public offering.

Last Tuesday, Peapod reported disappointing third-quarter financial results, with operating expenses rising more than expected, to $13.8 million from $9.0 million a year earlier. General and administrative expenses increased to $5.0 million from $1.9 million, primarily due to a one-time charge related to the hiring of Malloy at the end of September.

Malloy was previously executive vice president of wireless operations at AT&T (T), and he replaced Andrew Parkinson, a co-founder of Peapod who is now chairman of the company.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,827.75 +12.81 0.07%
S&P 500 2,072.83 +5.80 0.28%
NASDAQ 4,787.3170 +29.0650 0.61%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs