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    • Gaiam Won't Stay Off of Wall Street Radar for Long [view article]
      There is a very very large short interest in GAIA and I think they are going to have a problem. The knock on GAIA is that it is an "expensive" stock but I think this analysis is basically wrong. The significant short interest has been there for quite a while, at least since the stock was in the low teens. Now GAIA is taking public its solar operations which have a value of $5-10 per share.

      The original short story was predicated on the fact that GAIA wasn't bring much from the to the bottom line. The real reason for this is that they are investing heavily for the future and also expensing everything. For example, when they set up a "store within a store" all the initial expenses are run through the income statement.

      The company is also investing heavily in its subscription business. Recently, gross profits have been significantly better than guidance, but GAIA has not let the difference flow to the bottom line but has instead used it to increase investment. At some point soon, GAIA is going to sharply reduce investment and start harvesting and all of this is going to hit the bottom line.

      The short interest is 3 million shares and the shares are fairly tightly held by some committed longs. I think this one could be interesting.

      Feb 12 11:10 AM
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