The Bound and Gagged

| About: XO Group (XOXO) (KNOT) reported earnings yesterday and they were good. I mean, really good. However, analysts were expecting even higher sales based on the Wedding Channel acquisition from last year and the numbers were soft in that area. Internet companies are only as big as their sales and considering the stock's huge run this last year (over 100%), a pullback on the faintest of disappointment was inevitable.

For those who remember, I had recommended KNOT back in the summer of last year around the $16-$17 level, and recommended profit taking around $28 a couple of months back. While the stock advanced into the low thirties this year, this pull back vindicates my move to sell. While the stock still remains a take-over candidate, the market looks a little weak - especially Internet. This stock will probably see $22 before $30. On a pull back to $22, I might considering buying, but it depends on how the rest of the market and sector is behaving.

Full Disclosure: I do not own shares of KNOT but my position might change anytime without notice.

KNOT 1-yr chart: