Retail

Bidz.Com.. When Massive Sales Aren't Enough (BIDZ)

Douglas A. McIntyre
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Bidz.com (NASDAQ:BIDZ) is seeing shares battered and tattered in early trading.  At one point shares were down over 20%.  The online jewelry auctioneer said that sales during the Thanksgiving weekend rose a whopping 78% over last year. 

The company had recently announced third quarter revenue of $40.1 million, a 48% increase compared with $27.1 million a year ago, and it reaffirmed its guidance for Q4, fiscal 2007, and 2008.  In short, that is not raised guidance.  Here is the guidance:

  • Expects revenues for the 2007 fourth quarter to be in the range of $56-$58 million, and expects pre-tax income of approximately $5.6-$6.0 million.
  • For 2007, it expects revenue in the range of $180-$182 million and gross margin of approximately 27-28%. The Company expects pre-tax income of $18.0-$18.5 million. The Company expects its effective tax rate to be approximately 20.2%, and expects to end the year with approximately 26.4 million fully diluted shares outstanding.
  • For 2008, it expects revenues to be in the range of $225-$230 million, pre-tax income of approximately $23.5-$25.5 million and gross margin of approximately 27-28%. The Company expects its effective tax rate to be approximately 40%. The Company expects fully taxed GAAP EPS of $0.47-$0.51, and expects to end the year with approximately 30.0 million fully diluted shares outstanding.

In short, this is a bit more clear now that it isn’t processing the earnings.  Its share count is going to grow and its tax rates are going up.  Considering this one just appeared on the #2 spot on the IBD 100 this weekend, this is going to have some pretty infuriated traders behind it.

Shares are down some 19% at $13.31 today in early trading.  The 52-week trading range is $4.90 to $22.50, and shares are now down more than one-third from yesterday’s early highs.

If this one falls too much more, we’ll be looking at it for our own "10 Stocks under $10" newsletter.

Jon C. Ogg
November 27, 2007

Jon Ogg produces the 24/7 Wall St. Special Situation Investing Newsletter; he does not own securities in the companies he covers.

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