Stocks | Jul 9, 2010 | 1 Comment

Blockbuster—A Blast from the Past

Look Out Below . . .

Blockbuster recently got delisted from the NYSE and for me it was a prophecy fulfilled (of sorts). Back on July 18, 2008 I wrote a post about the coming doom of the stock “Blockbuster—Going Anywhere?” and it sure has come true.

At that time, Carl Ichan had bought a truckload of Blockbuster stock, but it was still waffling around $2.42 per share.

Blockbuster is a great example of how far a stock can fall and how you have to remove hope from the investing equation and just focus on fundamental business facts.

I closed that article by saying that “the writing is on the wall for Blockbuster.”

Since then Blockbuster has dropped and dropped. In fact, it’s not even BBI anymore. Now you need a pirate’s treasure map to find the stock. I’ll make it easy for you. It’s current trading under the symbol BLOKA.PK.

Price? My kids can load up on Blockbuster shares. BLOKA closed July 9, 2010 trading at 17 cents per share. Best of all, Yahoo Finance has the one-year price target at 8 cents per share.

Volume of Blockbuster today was 3,606,476 shares or about $541,000 – $613,000.

By the way, those are Class A shares. Blockbuster also has Class B shares, which are listed as BLOKB.PK.

I know there’s someone out there reading this that’s thinking about buying Blockbuster since it’s dropped so far. Here’s the problem. It’s now trading on the penny level where a slight move down can destroy your capital. Sure, it could go up too, which would be an amazing return. Anything is technical possible, even if it’s not very probable.

Fundamentally, the company is losing money hand over fist and it is outdated—just like that store that used to sell 8-track tapes. On a technical note, the stock price had a double top a month ago, which tends to signal possible downside.

The Wall Street Journal has an article out today about Blockbuster needing bondholders to grant a forbearance so it didn’t have to pay a $42.4 million payment right now. When things go bad, they really go bad.

I’m all for doing a little speculating here and there, but BLOKA.PK has nothing going for it right now. But hey, if you’ve got money burning a whole in your pocket, wait for a pullback to about 12 cents per share and pull the handle to start the slot machine.

Image credit: Cobrasoft