Shares of headphone-maker Skullcandy (SKUL) shot up nearly 30% today after the company reported fourth-quarter results that were better than expected. "Better than expected," however, translates to profits being down nearly 70%. In this segment from Friday's Investor Beat, host Chris Hill and Motley Fool analyst Ron Gross discuss just how low the sentiment around Skullcandy had to be for the stock to react this way on such awful news. Ron says a mix of beating expectations, plus short covering by investors who had thought the company was done for, can cause a pop like this. While he does see a handful of things that the company is doing right at the moment, he doesn't see much of a competitive advantage here, and wouldn't be a buyer at these prices.
Free Article
Skullcandy: The Benefit of Low Expectations
By Chris Hill
–
Mar 7, 2014 at 8:51PM
NASDAQ: SKUL
Skullcandy, Inc.

When expectations are this low, even an awful quarter can cause a stock to pop.
Chris Hill has no position in any stocks mentioned. Ron Gross has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Our Most Popular Articles

1 Growth Stock Down 80% You'll Regret Not Buying on the Dip

I Own 12 High-Yield Dividend Stocks. Here's the Best of the Bunch.

Cloud Computing Revenue Is Soaring Toward $4 Trillion -- 2 Growth Stocks to Buy Now and Hold for the Next Decade

Nasdaq Bear Market: 5 Jaw-Dropping Growth Stocks You'll Regret Not Buying on the Dip
Premium Investing Services
Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.