Monday, January 20, 2014

RSH new all time low. Is this RadioShack's final year?

Forget the 52 week low, RadioShack corporation's stock (RSH) is trading at an all time low, and will probably continue to decline further this year due to their old fashioned business model. Don't get me wrong, my local RadioShack is a great place to go. I'm usually the only customer in the store, and checking out all the gadgets while striking up a conversation with the sales person is a great way to kill some time when your car is getting an oil change around the corner. The problem is that it doesn't make them any money. The occasional battery, gadget or cell phone that's sold isn't really a big deal compared to the competition. To be honest, I've never been a big fan of RadioShack's stock because of its business model which is continuing to suffer under the 'modern' competition. In fact, it seems like people just take advantage of RadioShack's expertise (You've got questions, we've got answers - oh, and then you buy it elsewhere, where it's cheaper - and you don't get bothered about buying a wireless phone, an overly expensive battery, or something else you don't need). I believe RadioShack's days are numbered, its stock is trading at an all time low (52 week high/low is $2.02/4.36) and there's a good chance it will get a lot worse for them this year. I think soon we can see the stores closing 'Blockbuster' style. Let's have a look at the stock chart.

It's obvious RadioShack has lost favor with investors and traders. The question now is, how long will they be able to continue their current operations? The outlook is not that rosy for them, I expect to see RadioShack declining to a true 'penny stock' very soon. Like I said previously, it amazes me that I'm usually the only customer in the store, no matter which RadioShack I go to, even in well populated areas. In the beginning of 2014, its stock plummeted even further, now only worth a measly $2 a share. Is it worth picking up now? Absolutely not. RadioShack will probably go out of business 'Blockbuster style', and it will happen rapidly, filing for bankruptcy this year. There's is no way they can keep this up another year. Going short with caution is my recommendation (Set tight stop losses). Tomorrow, I'll be entering my short, SL will be $2.10. It's worth the trade.

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