Nobody buys stock to lose money, but it happens.

It might go something like this: You hear about what sounds like a game-changing company, and of course you’re skeptical. So-called game changers are a dime a dozen these days.

Still, this particular company looks like a standout, so you do all your due diligence — and, indeed, the firm seems all it’s cracked up to be, with a unique product line that’s gaining popularity, a strong balance sheet and impressive top- and bottom-line growth. Its stock is up a lot, but all signs indicate plenty more upside to come.

So you look for a good entry point and establish a position. Maybe you even buy more of the stock than usual because the future of the company is just that bright. Management and analysts see it disrupting an established industry and grabbing huge market share from the old guard.

But a few years later, none of that has come to pass.

It so happens the firm hit saturation a lot quicker than anticipated, so now sales and profits are falling, margins are shrinking and the stock is taking a beating. After yet another disappointing quarter and several false takeover rumors, you’re out 20%, 30%, 40% — maybe even more depending on how high the stock was when you bought it.

Sound familiar? It should because it’s the story of SodaStream International Ltd (NASDAQ: SODA) in a nutshell, and it’s still playing out right now.

Yes, the stock has crashed and rebounded before, but this time it’s down for the count. Over the past few years, it has become crystal clear that, as an investment, SodaStream is a big flop.

For instance, those who thought they were picking up a bargain at the beginning of the year have since seen their investment drop about 60%. Even if you’d bought at the very start when the price of the stock was lowest, you’d still be out about 12%.

The latest insult occurred on October 6, when shares fell more than 20% after management slashed third-quarter guidance. Both sales and profits will likely miss expectations by double digits when SodaStream checks in on October 29, management warned.

Of course, even the best firms have their share of bad quarters. But for SodaStream, eroding performance is now a major issue. After maintaining more than a 33%-a-year pace from 2008 to 2012, for example, sales growth is clearly tailing off. The firm did manage a strong increase of 29% in 2013, but the top line is actually projected to shrink slightly to $561 million this year.

Earnings per share, or EPS, grew rapidly for a while, too. But after peaking at $2.09 in 2012, they fell 6% to $1.96 in 2013. And even if SodaStream meets expectations for this year, which it probably won’t considering management’s reduced guidance, then the firm’s still only looking at EPS of $1.56 — more than a 20% decline from last year.

#-ad_banner-#Operating margins are currently 6%, well below the 2011/2012 peak of around 10%.

Several key factors underlie these numbers. One of the most important is the well-known shift among consumers away from carbonated soda — a trend that has plagued soft drink giants The Coca-Cola Co. (NYSE: KO) and PepsiCo, Inc. (NYSE: PEP) for about a decade now. People know soda’s no good for them, so the general public is gradually giving it up.

This may seem less of an issue for SodaStream, which purports to be healthier because its soda flavorings have less sugar. However, most still contain substantial amounts of sugar and/or artificial sweetener, as well as potentially harmful chemical additives.

So rather than healthier, SodaStream may be better described as less bad. Based on its recent results, this clearly hasn’t been enough to overcome the growing aversion to carbonated sodas.

That’s especially true in the United States, a crucial market SodaStream just hasn’t been able to conquer. In Q2, for example, revenue in the Americas fell 14% to $41 million, mainly on poor U.S. sales.

The failure to take the United States by storm is especially bad news. It means SodaStream will be far more vulnerable when competition really starts heating up. And that will occur sometime next year, when Coca-Cola and coffee machine leader Keurig Green Mountain, Inc. (NASDAQ: GMCR) release the Keurig Cold do-it-yourself soda maker.

Keurig Cold should have no trouble taking market share from SodaStream simply because Coke and Keurig are two of the most established, popular brands in U.S. history. Many consumers interested in making their own soda may even be waiting for the Keurig Cold to come out, rather than buying a SodaStream now.

Ultimately, consensus estimates for SodaStream to grow EPS 24% a year for the next five years are apt to prove far too generous. Considering the headwinds, the company may be lucky to do less than half that, despite a pretty good business outside the United States.

In the end, I suspect both SodaStream and Coke/Keurig will find at-home soda making nothing more than a niche market because consumers prefer the convenience of grabbing a soda out of the fridge or quickly filling a cup at a local soda fountain. As a pure play, SodaStream stands to suffer most from this reality.

Risks to Consider: SODA may see rapid near-term gains as bargain seekers scoop up battered shares and management desperately tries to reposition SodaStream as a health and wellness company — something it clearly isn’t. This may give the false impression that SodaStream is turning around when, in fact, any major spike in stock price is probably temporary.

Action to Take –> Recognize SodaStream for what it is — a fad that has run its course. Now, I’m not predicting the complete demise of do-it-yourself soda, but chances are it’s a limited-growth industry. That means SodaStream is a stock with limited long-term upside at best. However, as far as shares have already fallen, they could drop even further for the reasons I’ve described. Extreme risk takers might consider taking a short position. Current shareholders should avoid the temptation to hang on just because of recent buyout rumors and seriously consider closing their positions now before things get even worse. After several false alarms, the chances of a buyout are looking pretty slim at this point.

If you own SODA, then it may be time to sell… but what about a company worth buying? My colleague Dave Forest found a group of companies that have such strong fundamentals and growth potential that you can buy shares and virtually hold them forever. He aptly calls them “Forever” stocks. You can find the name and ticker symbols of a few of the companies by clicking here.