I can only guess at the the drivers behind SHLD's stock recent performance. Lets take a look at the chart over the last 90 days. The share price on Thursday was about $51 which was about the same as the $52 share price on September 22, 2011. But in between those two dates, SHLD's share price reached $82 on October 27. Was there any reason other than share buy backs for the rise in SHLD's price to $82 in October? So moving back into the $50s in December seems natural if the company stopped supporting it's stock through share buy backs.
What really bugs me about SHLD is the low volume on most days (except of Friday). Relative to other stocks, and especially considering SHLD's market cap, the volume indicates a lack of interest on Wall Street. Compare SHLD's avg volume of 500k shares per day with the average volume for Best Buy (BBY) 6.7 million or Lowes (LOW) 16.9 million.
Maybe Buffet is right about the drop in share price being related to the spin off for Orchard Supply. If you are short in SHLD, and you have made 70% on your short position on SHLD this year then maybe the spin off gives you enough reason to take your profit now. I don't know.
This is a brutal sell-off that I have not seen since the 2008 crisis when the stock bottomed right at $30. I fear that the technicals are set-up for a repeat of this move. My biggest concern right now with SHLD is that the cash flow has dried up and there is no money left to support the stock with the buyback any longer. The next quarter may be the most important since Holdings was formed. We need to see if they will be able to cover the massive losses from the previous 3 quarters of the year. If they do not turn a profit this year, watch out...
Absolutely - and there's no way the drop in value is wholly attributable to Orchard Hardward spinoff. Bottom-line losses, negative cashflow (especially with essentially no capex being spent), massive borrowings on the flex credit line - this is looking dire.