Skullcandy: The Benefit of Low Expectations

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.