.Is soaring toy stock for real or another pig in a poke?
cgi.sacbee.com
(Published Sept. 8, 1999)
If you're really itching to throw the dice and a trip to Las Vegas is too far off, have we got a stock for you.
The company is called Play-By-Play Toys & Novelties Inc. and while it has nothing to do with the Nevada crowd, those investing in the small San Antonio-based company are in for a true crap shoot.
The company was one of the Nasdaq's big stories last week after announcing that it will make and distribute toys based on Nintendo's blockbuster video game Pokémon.
There's nothing that Wall Street investors like better than the latest craze and Pokémon fever is just that. Shares of the company skyrocketed an amazing 200 percent Thursday, rising $2.93 a share to close at $4.43 as more than 13 million shares changed hands, roughly 150 times its three-month daily average.
On Friday, the shares remained red hot, closing up another 40 percent to $6.25. Tuesday, the shares pulled back, losing $1.50 to close at $4.75.
Play-By-Play (symbol PBYP) shares were selling for just $1 a share on Aug. 30, far off its 52-week high of $11.
For those who have somehow missed the craze, Pokémon-mania started in Japan in 1996 with a portable video game. Since then, the game with 150 or so cuddly monsters -- including Jigglypuff -- have been featured on everything from television to trading cards to toys. There's even plans for a Pokémon movie in the coming months.
Play-By-Play expects to make toys, beanbags, key chains and temporary tattoos and ship them to U.S. markets by April, which means that they will miss this Christmas season. But company officials are betting that Pokémon will continue to wow the youngsters.
This may be a classic case of Wall Street investors falling in love with the latest fad to hit the market -- and disregarding the economic fundamentals that paint a different picture.
The recent stock run-up is quite a turnaround for a company whose shares hit a 52-week low of 93.8 cents Aug. 30. At that time, the company said it expected to report lower fiscal fourth quarter results -- earnings of only 5 cents to 10 cents a share, well below the 30-cents-a-share estimated by The Street.
Those numbers reflect continued weaknesses in the retail sector for traditional toys, particularly in the United States and Latin America.
Play-By-Play also has secured an extension of its $35 million senior credit line to Oct. 15, "the first important step in resolving our capital needs for the future and provides for additional liquidity," the company said.
Perhaps the harshest critic of the company is The Truthseeker Report, an interactive online magazine, which issued a sell-and-short recommendation on the stock Friday at $7.50 a share. The Truthseeker, www.thetruthseeker.com, said it believes that Pokémon toys are a one-time fad that will go the way of Cabbage Patch dolls, pet rocks and Ninja turtles.
"The Pokémon craze may wear off before the holidays where the only place to find such items is in local flea markets," the e-mail service site said.
Play-By-Play executives are hoping Pokémon will have a greater shelf life, becoming something closer to a classic than a fad.
The company, which had revenues last year of $178 million, also has license agreements with Warner Bros. and the Walt Disney Co. to support its bottom line.
JACK SIRARD's column appears Sunday, Wednesday and Friday. Write him at P.O. Box 15779, Sacramento, CA 95852; e-mail to jsirard@sacbee.com; or call (916) 321-1041. |
