Consider PLA as a good short: 1) Stock has gone from $2.68 on halloween to $5 on monday on buyout rumors, however the rumored company that was going to buy PLA came out and said they will NEVER buy PLA 2) CFO just quit 3) Last year CEO quit to "spend more time with the family" - uh huh 4) Playboy stopped selling DVD's last year 5) Due to majorly declining subscription revenue, playboy now publishes every other month instead of monthly 6) Why buy playboy magazine when you get the same thing online for free? 7) Company has a lot of debt 8) PLA hasnt been able to replace lost revenue with online business For all these reasons i see PLA going to at least $2.50, probably $1 soon. This company is in a death spiral. I just dont see anyone ponying up $200m for a company with a product no one wants. Disclosure: I have a small short position in PLA.
Gosh: I'm still a bit of a trading noob here, but I've learned several VERY important things since March lows this year: 1. Stock gains 100% in a few days: Buy signal 2. Stock drops 50-70% in a few days: Strong buy signal 3. CEO resigns: Buy signal 4. CFO resigns: Buy signal 5. CEO & CFO both resign: Strong buy signal 6. Company 2010 earnings projections are a loss that's twice 2009's negative earnings: Buy signal 7. Company is fundamentally in a confirmed death spiral: Strong buy signal 8. Analyst upgrade: Buy signal 9. Analyst downgrade: Buy signal 10. Goldman Sachs downgrades stock from "sell" to "conviction sell": Strong buy signal Disclosure: I have an extreme short bias and wish you all the best in your trade. It looks like a great short ("strong buy signal!")
PLA is down 8% as i write this. PLA reminds me a lot of CIT. CIT put all its hopes on getting bailed out by the government, when that didnt happen it eventually had to file for bankruptcy. PLA is putting all its hopes on a white knight, if that doesnt happen i expect the same outcome. This is a badly managed company on a death spiral.
An article came out yesterday that says playboy is worth $30 million, not the $300 million hef is selling it for: http://www.reuters.com/article/innovationNews/idUSTRE5AI5F620091119 Gradient Analytics analyst Nick Gibbons said $33 million might be the right price for the brand. It "doesn't sound astronomical, and would be within Iconix's reach," Gibbons said.
How the heck did Playboy get into this situation. They were big back in the day and now they are a shadow of their former existence. Why not open up some Playboy clubs in select locations, work on revitalizing the brand. I mean the brand has good value it just needs some TLC and some work.
Ok, Doji made me smile. But seriously, Playboy is a valuable brand, if someone creative can get excited about doing something with it. I wouldn't short, because all it takes is one internet-billionaire to buy this as a trophy company to wipe out all shorts. Mark Cuban bought the Mavericks for only $285-mil. I would not be surprised to see another billionaire drop $150-mil on PLA only so he could throw better parties.