Consumer Anger and Stock Prices: Charting the Worst-Company-in-America Competition
It’s game-on in the annual contest to crown the company that has pissed off consumers most in the past year. Thirty-two companies, including Apple (APPL), Facebook (FB), JP Morgan Chase (JPM) and Comcast (CMCSA) are in the running for ignominy in the Consumerist website’s Worst Company in America contest.
The Consumerist, a subsidiary of Consumer Reports, has been running this race to the bottom since 2006. Past winners/losers include Halliburton (HAL) in 2006 and BP (BP) in 2011. This year, Electronic Arts (EA) could pull off the unprecedented feat of back-to-back wins. Following last year’s win, consumers have a whole new round of anger to vent with the recent server-meltdown fiasco that accompanied the latest SimCity release.
The bracket-style voting continues through early April. In the first round, Apple knocked out Microsoft (MSFT), with 65% of the votes. Apparently Apple’s iPhone 5 mapping software fiasco, the new pricey proprietary Lightning cables, and the shop-with-us-or-tough-luck approach to Apps was deemed more annoying than Microsoft’s inability to wow with introductions of Windows 8 and the Surface tablet. Or maybe it’s just that Apple products are a lot more relevant to consumers these days than Microsoft’s; it’s hard to get worked up about products you don’t use.
In other first-round action, Facebook was deemed far more annoying than Google (GOOG), grabbing 89% of the votes. Facebook’s next opponent will be the winner of the Electronic Arts v. Anheuser-Busch Inbev (BUD) matchup that has yet to go to the voter polls.
After having dissected the stock performance of America’s Most Admired Companies, it begs the question: does treating one’s customers poorly say anything about the stock’s investment prospects?
YCharts’ database tracks 29 of the 32 companies. Last year’s winner, Electronic Arts, is one of two companies rated Avoid -- the other is Cablevision Systems (CVC). Three of the original 32 up for WCIA are rated Attractive: Apple, Microsoft and JP Morgan Chase. (To be clear, it’s actually just the Chase banking portion that is part of the contest, though the investment bank’s recent tongue lashing in D.C. over risk mismanagement didn’t burnish the corporate parent’s image much.)
Over the past year none of those five companies have managed to keep pace with the market, as seen in a stock chart.
Over five years, Apple is of course, way ahead of the pack, and Cablevision also managed to best the market.
Past winners clearly haven’t fared well in the year they held the crown. Here’s Halliburton’s chart after being named WCIA in 2006.
An organization not a publicly traded company won in 2007: The Recording Industry of America (RIAA) for its user-unfriendly attitude toward illegal music downloading. In 2008 Countrywide Mortgage, the poster child for everything wrong in mortgage lending took the honors. Wish we could chart it, but it went up in a fire sale back in 2008. Bank of America (BAC), much to its eventual chagrin, bought it. Here’s BofA’s chart in the year after Countrywide won WCIA:
In 2009, it was AIG’s (AIG) turn, as consumer wrath over the financial crisis was at full boil. The stock actually rallied in the 12 months after being named WCIA; its near 60% gain beat the market. But it was the definitive dead-cat bounce, as that rally came after shareholders were all but wiped out after the government took over control of the insurance giant in the midst of the financial crisis.
In 2010 it was Comcast’s turn. This is the only (other than AIG) WCIA winner whose stock outperformed in the next 12 months. It’s also the only WCIA that has a subscription model with high switching costs that keeps the cash flow coming no matter how bad the customer service.
BP’s mangled handling of the Gulf Oil spill earned the foreign company the title Worst Company (Operating) in America for 2011. The spill occurred in May 2010, less than a month after the 2010 WCIA was crowned. For the year after it was named WCIA (April 2011-April 2012) BP gained 2.5% compared to the 8% gain for the S&P 500. Here’s a chart dialing back to when the spill occurred through the year BP reigned as WCIA.
And finally, there is Electronic Arts. It was actually on a pretty nice rebound run until the recent SimCity debacle.
We’ll post an update when this year’s Worst Company in America is crowned in two weeks. The odds suggest it’s not a stock you’ll want to rush to own.
Carla Fried, a senior contributing editor at ycharts.com, has covered investing for more than 25 years. Her work appears in The New York Times, Bloomberg.com and Money Magazine. She can be reached at email@example.com.