Aloysius: I may not know much, but I guess I know what happened to NLS (the stock) in the past 6 months: supply and demand.
Here's my hypothesis for what's been going on the past six months: [A net publication] said to short this puppy, and a huge stampede of people did just that. You sell short 10 million shares of 33 million outstanding and the price will drop alot. It's just supply and demand: but just for the shares, nothing to do with the exercise equipment business at all. Great buying opportunity for any of us cynical people (for all I know that could include the original short promoters) to snatch up a couple thousand shares and put them in the mattress. I won't retire until about 2032, but you gotta think ahead!
So now we hear all this wishful thinking about a downward trend in margins, etc., whatever, but the truth is that net margins remain in the same 15% to 20% band they've been in for five years. Up 2 points, down 2 points. Big deal. Acquisitions f-up the accounting and some companies take advantage of the confusion to do extra "earnings management" & give the appearance of rapid growth. Nautilus group, on the other hand, has done the right thing and admitted that they bought some brand names that cost real money. Hence the "shrinking earnings". It's called "investment". These guys have great products and they're pros at selling. The stock price will resume its natural course soon enough; meanwhile they're also doing the right thing in the stock market: buying back stock while it's undervalued.
Obviously a large enough pool of investors can sell any security into the ground if they all hang ass out far enough into margin-land, and shorting is a great way to do that. The only question is, why would they want to?
So what's the end-game here? Can the 9 million remaining shares short (hmmm, whose 1 million shares were bought to cover?) all be miraculously bought back below $20? Of course not, because -- you guessed it -- supply and demand will play a role. Eventually some group has to suck up nearly 1/3 of the NLS shares on the entire market just to get their money loose. In these quantities, the effect on NLS shares will be similar to an attempted hostile takeover (if anyone is old enough to remember LBOs). You buy 30% of any company on the open market, the price goes thru the roof.