Ulta Salon (Nasdaq:ULTA) became the highest social media stock this week on www.Stocktwits.com Ulta had released earnings and beat street estimates creating a trading frenzy. Long time traders familiar with the stock were waiting for it. Judging by their social media commentary they were watching the technicals and positioned themselves well before the earnings release.
The stock has increased from $90 to $100 @ share in the past ten days. Good ride for two weeks. Matter of fact it was excellent.
Couple of factors to consider. A brand new CFO resigned just thirty days into the job. Ulta says it had nothing to do with the company. The CFO position has been hard to fill. Fast growth companies need a strong CFO or the proverbial Black Swan shows up.
The short position is about 4.82% of the public float and there has been some very recent covering. Up tick/down tick is 0.97 which is right on the line of neutral. So it did not take much to pop.
Fundamental investors will be scrutinizing the growth story and balance sheet fundamentals. Fast growth creates its own challenges. Good sales execution is not the only factor to success. But then if you do not have a regular CFO in place you would not know that.
George Gutowski writes from a caveat emptor perspective. Follow him on twitter@financialskepti
- Why I Am Short Ulta (seekingalpha.com)
- How to Trade US-Based Ulta (minyanville.com)
- Ulta Salon, Cosmetics & Fragrance’s CEO Discusses Q3 2012 Results – Earnings Call Transcript (seekingalpha.com)