Will K-Tel's stock fizzle?
That is the question on analysts' and investors' minds following the music marketer's breathtaking climb and subsequent return to earth.
That is the question on the minds of analysts and investors after the music marketer's breathtaking climb and subsequent return to earth.
It started in mid-April, shortly after K-Tel announced that it was expanding its sales of oldies-but-goodies to the Internet. The news pushed the company's share price from 3.31 to 7.46 in a single day, adjusting for a stock split that became effective on May 8.
The momentum continued, with Stock Investor Trading News initiating coverage of K-Tel soon after the announcement, with a "long-term and short-term strong buy" rating. By early May, K-Tel was at 33.93--again after adjusting for the split.
Investors haven't been the only ones getting out. According to financial information provided by Bloomberg, five of K-Tel's top officers filed to sell nearly 379,000 shares once the stock began its descent. The Wall Street Journal, citing data from CDA/Investnet, reported that that the five executives planned to sell 542,978 shares.
Last month, it struck a marketing and services agreement with @Home, which provides high-speed Net access via cable lines. On June 1, the company said it also would market videos on the Net, through "K-Tel Express," its newly launched online service.
Two analysts, however, said that K-Tel's ride is a cautionary tale for investors--many of them individuals--who leap at Internet stocks before taking a good look. With the success of companies such as Yahoo and Amazon.com, investors have paid increasing attention to up-and-coming Internet companies that, over the past month or so, have flooded the market with announcements.
're="" going="" to="" sell="" your="" product="" over="" the="" internet="" justified="" value="" yahoo="" or="" "="">Excite has," said Andrea Williams, an analyst at Volpe Brown Whelan.