Why This Expert Thinks We Didn't Need The Keurig 2.0

Kevin Kelly was recently a guest on #PreMarket Prep, a daily trading idea radio show hosted by Joel Elconin and Dennis Dick.

Shares Keurig Green Mountain Inc (NASDAQ: GMCR) were down almost 30 percent on Thursday after the company beat earnings expectations and guidance, but missing estimates on the revenue front.

The company derives the largest portion of its profit from the sale of K-cups. This figure, same as the one for coffee machines sales, declined substantially over the quarter.

Following the earnings call, Kevin Kelly, Recon Capital’s chief investment officer, looked into the company and assured people are no longer buying K-Cups: “I think it was pretty much finished on the Keurig 2.0."

Despite the big push behind the Keurig 2.0, he thinks the machine was somehow unnecessary, since “there wasn’t anything wrong with the [Keurig] 1.0.” The renewal/upgrade cycle for coffee machines is not the same as for phones, he said.

He continued, “This isn’t really a big surprise... It’s hard to try to get behind Green Mountain right here (…) Before, there were rumors that it could even be a takeout candidate.” However, Kelly now believes some of the parties which were rumored to be interested will not want to “touch the name any more.”

Kelly highlighted other reasons not to get behind the company now: sales were bad, the stock is falling big time, and although people are using the products, they're not buying the new machines.