Hot Topic is Not so Hot

Hot Topic is on fire and not in a good way.  It’s burning like Timothy Geithner’s behind at a Congressional hearing.  Earnings are down 21%, margins are shrinking, and Marilyn Manson has not had a hit album in years.  Citi says to reduce your expectations and expect a target price of around $5, down from $7.   Analysts are saying that the women’s clothing line will under sell through 1Q10. Their Twilight line of products didn’t create enough buzz to satisfy the analysts.  That’s a very bad sign of things to come.

The stock plummeted from slightly below $7  all the way to $5.57 today.  We arrived late to the game today and SHORTED this one at $5.64 and our T-Stop executed at $5.60. HOTT went up to about $5.80 from there and did its usual flat line (how goth).  HOTT Feb 10 5 PUTs (UHONA) are at Ask $0.45 right now.  If you believe the analysts this could be a good play for a bad Christmas earnings season.  We’re going to stay away from HOTT until Q4 earnings and then SHORT them again.

Not a real big win today, but we had our shot at kicking the emo kid while he was down.

Hot Topic 2 day chart
Hot Topic 2 day chart

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