I'm in a similar situation. So if you get a good answer please relay :)
I would say personally that we will have to wait till next February when earnings come out. I would bet we will see upside movement end of year / early next. Just my thoughts.
We will see some improvement moving forward. We will have increased buying pressure from the "value" crowd. Also some short covering will be taking place moving towards next earnings announcement. The numbers will look good from holiday sales and there will be very little downside risk for the shorts to exaggerate.
I've averaged down here and will be exiting a bunch when we start to smell 12 again.
I feel like the market is dull, and people will be selling their losers in December. Also, the lower lows, and highs each day are discouraging. I also think there is some obvious major manipulation happening so the best we can do is bet correctly on where the manipulators will take the stock. The low volume is interesting and inst ownership is still good. And the new CFO is probably orchestrating something. I have some insight into the inside sales and I know they mean nothing. And SKUL has some very powerful ties to multinational marketing firms so that's good. But, as you know, the stock is worth what the market determines so your guess is as good as mine.
Bought a bunch of shares at 13.80 and then at 11.90, thought I was geting a bargain. Holding on for dear life right now. I have a theory that helps me get through my day. Management actually knows exactly what they are doing and that lowering the EPA was actually all part of their master plan. It just added fuel to the fire for the shorts and they pounced on the "negative" news like always and drove down the stock. Skullcandy knows they will have a great quarter and kill the numbers set out, to FINALLY get rid of these shorts and set the stock up for recrod gains!
Keep an eye on what Congress does in December. If they increase 2013 tax rates (likely ) look for a large number of shorts in SKUL to cover their positions in Dec., which will drive the price up. The shorts will want to realize profits in 2012 to avoid paying higher tax on their gains next year. Given the low volume on this stock, that dynamic should move the stock.
The next pivot point will likely be their 4t quarter earnings announcement early next year. If they beat their consensus earnings, look for the shorts to head for the hills. This stock's current price is already reflecting the chance of disappointing 4th quarter earnings. Absent any major moves in the overall stock market in January, SKUL will likely drift up as the earnings date approaches, especially if its trading price is still in single digits. Shorts won't want to risk a good earnings announcement if they already have nice profits in their positions, so many will cover.
In summary, not sure where the bottom is on this stock in the near term because of the heavy short action, but fundamentally it is trading pretty cheap right now. Expect to earn at least a $1 a share in fourth quarter with growth again next year. I would not sell at this price because in the long run it is a good value at $8, regardless of the short term swings the rest of this year.