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Skullcandy, Inc. (SKUL) Message Board

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  • krug82 krug82 Feb 9, 2013 8:53 AM Flag

    Is this the bottom?

    Thanks for the thoughtful analysis. Sure, it could go to 2 dollars a share, maybe even one, fundamentals aren't informing the market. that said, fundamentals do drive the private markets (in which i invest and know well) and I am just surprised there's not a take private going down or at the very least a mm i banker trying to pitch their wares. Have a great weekend.

    Sentiment: Buy

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    • Krug, I can't argue the point, that there is a price where fundamental reality will assert itself. As you said earlier it is at 3.5x EBITDA, that is compelling. Or, as someone else, I think it was Principled, pointed out earlier, $1 of earnings at a cost of $6 does NOT require growth.

      On the other hand $5 is like a hot stove. You tell the kids not to touch it, but then they are compelled to do it all the more.

      A bullish note about Fryday's action was that compared to the other SOW's, this one took more EFFORT to achieve a smaller RESULT. I have a simple indicator I wrote for my platform which just divides volume by the price spread (volume / (high-low)); I call it "Churn". Here's what the Churn values were on past SOW days:

      Sept 13th: 1.18 M shares/ $
      Nov 2nd: 0.84 M shares / $
      Dec 31st: 3.35 M shares / $
      Feb 8th: 5.65 M shares / $

      A sample calculation for Feb 8th would be Churn = [2.654M shares / ($6.45-5.98) = 5.65M shares per dollar. In other words it took 5.65M shares of Effort to create $1 of Result. So, looking at the above data, you can see it is taking more and more effort to get a dollars worth of result.

      So, Feb 8th had a lot of volume, but that volume is achieving a lessened result. During any drop, the dumb money is selling and the smart money is buying. Then during the following consolidation / trading range, the smart money profits by selling it back to new dumb money. The difference now, is that more smart money is stepping in and buying the SOW, hence a lower result per share or more churn.

      So yeah, I agree, IT IS getting close here.

      • 1 Reply to onepoint272
      • Allow me to correct that penultimate paragraph:

        The difference now, is that the smart money is stepping in EARLIER to buy the SOW, hence a lower result per share or more churn.

        Of course much if not most of that SOW-buying must be the smart shorts covering. I think what we're witnessing is more and more competition for the supply of shares available on a selling day. They are stepping in and buying the SOW quicker, to beat the other smarts to the punch.

        I'm trying to remember too, that during a bear market all the news is bad news and at the bottom the news is the worst. Can the news get much worse than low-end guidance and the CEO stepping down?

 
SKUL
7.18+0.01(+0.14%)Jul 11 4:00 PMEDT

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