SkullCandy IPO Doesn’t Do Much, Cool Stock Ticker Though

Jul 20, 2011
J. Webster
Comments Off on SkullCandy IPO Doesn’t Do Much, Cool Stock Ticker Though

In what has to be one of the cooler stock tickers around, SkullCandy had their IPO debut and will go by the ticker, SKUL. Again though, this was the case where if you got in on the IPO price of $20 per share you could have a nice $3 gain but the stock was down a few cents on the day, closing at $19.97 a share. The best hope for investors of SkullCandy is for a buyout. Who might want to add some cool brand to their company? Otherwise, it seems like cool stock ticker an all, there’s not much up side for this company.

From Reuters:

The 8-year-old company hopes to distinguish itself in the headphone market by capitalizing on what it calls “the increasing pervasiveness, portability and personalization of music.”

But one of the biggest challenges Skullcandy faces is its competition in a market dominated by larger companies with more established brands.

“They took a product and put their brand on it, which worked for a while, but the barriers to entry are so low,” said Francis Gaskins, an analyst with IPOdesktop.com. Gaskins said even Skullcandy’s modest gain late in the day, up less than 1 percent, was better than he had expected.

Skullcandy posted a 36 percent increase in net sales of $160.6 million in 2010 but recorded a 69 cents a share loss, hurt by higher interest expenses.

For the first three months of 2011, the company reported net sales of $36 million and a 5 cent a share profit.

Skullcandy has said it plans to use most of the net proceeds from the IPO to repay debt. Bank of America Merrill Lynch and Morgan Stanley were lead underwriters for the offering.

“Cult IPOs generally do well initially, and if not run really well and have a very strong business plan, they can easily fall away,” Sweet said.

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