Anybody who purchased stock in Niwot-based Crocs Inc. between July 27 and Oct. 31 should not join the class-action shareholders lawsuit that was recently filed against the company and its stock-dumping executives.

Instead, they should look themselves in the mirror and admit two things:

I look ridiculous in these plastic shoes.

Anybody who would pay an average of more than $60 a share for a company that makes ugly plastic shoes deserves to take a hit in the stock market.

Crocs went public for $10.50 a share (on a split-adjusted basis) in February 2006 and skyrocketed to $74.75 by Oct. 31.

Then, on Nov. 1, it took a nose dive to $35.39. Despite its meteoric growth trajectory, the company missed its revenue targets (slightly), and then its investors were suddenly struck with the revelation that a faddish company couldn’t keep growing at an insane rate forever.

This sparked a shareholders lawsuit from none other than San Diego-based Coughlin Stoia Geller Rudman & Robbins, founded by notorious class-action lawyer William Lerach.

Lerach recently pleaded guilty to conspiracy charges for allegedly bribing people to become plaintiffs in his class- action lawsuits. But I’m sure glad to see this hasn’t stopped his colleagues from filing class-action lawsuits whenever an overvalued stock like Crocs meets the cold reality of the marketplace.

Whose fault is it when a stock drops and people lose money?

Did these investors really think Crocs would climb forever?

Did anybody happen to notice numerous reports that Crocs’ top executives were dumping hundreds of millions of dollars’ worth of their own stock?

Chief executive Ronald Snyder and co-founder George B. Boedecker Jr. have each sold more than $100 million worth of their shares. Other Crocs executives have dumped theirs, too, by the tens of millions.

Clearly, these insiders didn’t think their stock would remain in the stratosphere. So why did anyone who bought this schlock stock think they knew better?

The lawsuit, against Crocs, Snyder and chief financial officer Peter Case, alleges that shareholders were duped by bullish pronouncements that had no basis in fact.

The suit cites statements like this one that Snyder made as Crocs released its second-quarter earnings this year: “We continue to witness robust demand for our expanded footwear collection.”

I love that word “robust,” which I think entered the corporate lexicon about seven years ago, sounds really cool and means absolutely nothing.

Crocs and its officers also allegedly misrepresented or failed to disclose their distribution problems in Europe and their rising inventory levels, the lawsuit alleges. They also failed to disclose that sales of their hole-riddled plastic clogs were suddenly becoming more of a seasonal item. Imagine that! Sandals seasonal? Who knew?

Crocs has yet to respond to the lawsuit except to say it will “vigorously defend” itself and its executives.

Its lawyers will have to come up with a more palatable way of stating the obvious: “We can’t help it if a bunch of idiots liked our plastic shoes so much that they paid nearly $75 a share for our stock.”

In defense of the idiots, though, the company still enjoys a chorus of cheerleading Wall Street analysts, including JPMorgan’s Robert Samuels, who called the sell-off an overreaction.

“Though to some extent it is like screaming down a black hole, we maintain our overweight rating,” he wrote Nov. 9.

His black-hole analogy proved apt as Crocs had recovered to only $40.51 as of Thursday’s close. Idiots usually listen to analysts, but I guess in the case of Crocs they got cold feet.

Despite this painful meltdown, Crocs is now trading at nearly four times its IPO price.

If you didn’t buy too late, as people in the class-action period did, you may still be sitting on a crock of gold. But if you got in late, well, you’re just sitting on a crock.

What did you expect from a company that makes plastic shoes?

Al Lewis’ column appears Sundays, Tuesdays and Fridays. Respond to him at, 303-954-1967 or

More in Business