Lemelson: Skechers Still A Short After Massive Selloff

  • Shares of Skechers USA Inc SKX plunged more than 30 percent after the company's third quarter top and bottom line fell short of expectations.
  • Rev. Emmanuel Lemelson, CIO of Lemelson Capital Management told Benzinga on September 25 his fund is short the issue at an average (adjusted for a 3:1 stock split) cost of $132.
  • Lemelson told Benzinga on Friday that the stock may still have further downside.
Shares of Skechers plunged more than 30 percent Thursday afternoon after the company reported a disappointing third quarter results. The company earned $0.43 per share in the quarter on revenue of $856.2 million while analysts were expecting an earnings per share of $0.55 on revenue of $876.54 million. Rev. Emmanuel Lemelson, Chief Investment Officer of Lemelson Capital Management, has been short the stock since at least August. On August 12, Lemelson told Benzinga that the stock has a "wild" valuation and that any "bump in the road" will affect the popularity of its products. Accordingly, the stock is vulnerable to a "precipitous fall." On September 25, Lemelson reiterated his short position and said that the stock is still "radically over-priced." The investment manager argued yet again that the company's products is a "fad" and his firm will continue to short the stock. Lemelson stated at that time his average short price (adjusted for a 3:1 stock split) is around $132. Lemelson reached out to Benzinga following the company's third quarter earnings release on Thursday. He said that the more than 30 percent decline in the stock was "totally expected." In addition, he is now valuing the stock in a range of $13 to $20 per share on a sales and cash flow basis. Finally, Lemelson reaffirmed that the stock is still a short opportunity, although "not as good as it was before 5 PM" on Thursday.
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