Why Radio Shack Stock Jumped Briefly
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Radio Shack gained as much as 12% at one point day after a warm response to its Super Bowl ad last night.
So what: The ad titled, "The Phone Call," was an attempt by Radio Shack to make fun of itself as a dated '80s brand. In the ad, a cashier receives a call from the '80s saying "It wants its store back," and all manner of '80s celebrities, including Mary Lou Retton and Hulk Hogan, show up to take away inventory that includes boom boxes, VCRs, and other dated electronics. At the end of the spot, the "new" Radio Shack appears, featuring modern products such as iPhone accessories and fancy headphones.
Now what: It's odd to see a stock react like this to just an advertisement. While the spot was clever and was chosen by many media critics as the best one during the game, it also underscores the problem Radio Shack's facing. Its brand and business model is dated, and it's struggling, like many of its electronics-retailing peers, to stay afloat -- and for good reason. Times have changed, as the ad reminds us, and many consumers now shop online or just have no need for the products that were once the company's bread and butter. After the early afternoon spike, shares finished up just 3%, which seems to reflect the market's realization that the ad is unlikely to affect Radio Shack's bottom line.
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The article Why Radio Shack Stock Jumped Briefly originally appeared on Fool.com.Jeremy Bowman and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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