Koss (NASDAQ:KOSS) is getting most of its consideration lately as a so-called Reddit meme inventory. KOSS inventory is a kind of seeing wild worth fluctuations and heavy buying and selling quantity after being championed on the Reddit dialogue board r/WallStreetBets.
The whipsaw motion could also be entertaining from afar, even because it’s seemingly nerve-wracking for folks holding KOSS inventory. But it surely’s additionally necessary to acknowledge that Koss is greater than a meme inventory.
It’s a worthwhile firm that has develop into an under-the-radar pandemic inventory attributable to folks working from residence.
Koss inventory has a “B” grade in my Portfolio Grader and is coming off a stable earnings report. Let’s take a better take a look at this Milwaukee-based firm.
Koss Is Outdated College
The very first thing to learn about Koss is that it’s been round for many years. The corporate was based greater than 60 years in the past, in 1958. Its first huge product was the SP/3 Stereophone – the world’s first stereo headphones.
By 1969 Koss headphones had been so well-liked and regarded so important that they had been put in on the presidential plane, Air Drive One.
It’s been innovating ever since and now produces a line of stereo merchandise, together with headphones, buds, ear clips and cordless headphones.
Whereas it’s not the most important and greatest headphone maker on the planet at the moment – arguably, that title now belongs to Apple (NASDAQ:AAPL) — Koss has managed to carry on to a slim place within the headphone area.
It now additionally sells transportable Bluetooth audio system and a line of classical music CDs performed by American orchestras. It sells to customers and its merchandise are made out there to colleges and prisons by distributors.
KOSS Inventory at a Look
The inventory worth in KOSS doesn’t look something like an old-school firm this 12 months, due to Reddit merchants. Koss inventory was at penny inventory ranges earlier this 12 months, buying and selling for round $3 per share. However when the r/WallStreetBets frenzy hit, Koss was a kind of who went “to the moon” as a WallStreetBets dealer would gleefully say.
KOSS inventory jumped to $58 per share in late January (a achieve of $1,580%). Then it topped that just a few days later, rising to $105 and registering a achieve of 1,760.
Inside simply a few days, nevertheless, the air went out of the balloon. Koss inventory was all the way in which all the way down to $12 just some days in the past earlier than one other Reddit-inspired rally began pushing the inventory worth increased once more.
As we speak, Koss is at greater than $21, which continues to be a 525% achieve from Jan. 1. That’s greater than a decent return.
Actually, you possibly can hardly blame Koss members of the family, who personal about 75% of the inventory, for cashing in and taking profits. In response to SEC filings, family members bought $31 million in inventory as the worth moved increased.
Add executives and members of the board of administrators and inventory gross sales on the inflated costs rise to $44 million.
To place that into perspective, Koss had a complete market worth of about $26 million earlier than the inventory worth jumped. It was a tremendous windfall for Koss members of the family and company executives.
Koss reported its fiscal second-quarter earnings on Jan. 28. Income got here in at $4.93 million, which was a rise of 18.4% on a year-over-year foundation. Internet revenue was $509,000, which was an enchancment over the $216,000 loss the corporate suffered within the earlier 12 months.
Notably, the corporate had a $506,700 Paycheck Safety Program mortgage within the quarter that was forgiven. That helped the underside line.
The Backside Line
Koss will seemingly by no means be a serious participant within the headphone market once more. Corporations like Apple are too robust for Koss to make vital inroads.
However headphones and private listening gadgets are extra necessary than ever lately as individuals are working from residence and going to highschool remotely. Anybody who’s in the identical room or identical house with another person goes to need to use headphones, buds or ear clips to allow them to hear what’s happening in no matter digital assembly or class they’re watching.
The Reddit curler coaster in KOSS inventory will come to an finish sooner reasonably than later. Within the meantime, will probably be a stomach-churning trip.
On the date of publication, Louis Navellier didn’t maintain (both immediately or not directly) any positions within the securities talked about on this article.
On the date of publication, the InvestorPlace Analysis Workers member primarily chargeable for this text was lengthy AAPL inventory. The workers member didn’t maintain (both immediately or not directly) every other positions within the securities talked about on this article.
Louis Navellier had an unconventional begin, as a grad scholar who by accident constructed a market-beating inventory system — with returns rivaling even Warren Buffett. In his newest feat, Louis found the “Grasp Key” to making the most of the biggest tech revolution of this (or any) generation.