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Shares of Shoot Up 17% in Heavy Trading

E-tailing: Belief that sector's stocks are oversold and short-sellers' moves may have led to Aliso Viejo firm's rise.

September 06, 2000|From Dow Jones Newswires

Shares of Inc. rose as much as 31% to $3.69 a share during trading Tuesday as some investors dipped back into the beleaguered electronic-retailing sector.

By the end of the day, the stock gained 47 cents, or 17%, to close at $3.28 a share in heavy Nasdaq trading. More than twice as many shares changed hands than the daily average for the past three months.

The Aliso Viejo online retailer did not release any news Tuesday that might have spurred trading.'s shares appeared to be benefiting, however, from some investors' belief that the sector's stocks have been oversold, said Daniel Ries, an analyst at C.E. Unterberg, Towbin in New York.

In addition, so-called short-sellers, those hoping to profit from a plunge in the company's stock, may have had to cover their losing positions and, in the process, played a part in's gains, Ries said.

Despite declines in the technology-heavy Nasdaq index Tuesday, a handful of other electronic retailers--including Inc., Inc. and EToys Inc.--also saw their share prices rise during the session.

Ries said that investors who began buying shares of higher-profile electronic retailers like Amazon over the past month are beginning to consider others in the sector, such as

Some investors may be hoping for a second-half rally in e-tailing stocks in a repeat of what happened in the past two years, Ries said. But the analyst cautioned that the online environment has changed markedly this year and that a sustained e-tailing rally would be unlikely.

Since the spring, many electronic retailers have faced heightened scrutiny about their ability to become profitable without first running out of money. A slew of recent mergers and bankruptcies among dot-com companies has further inflamed worries about the sector.

Shares of traded at $2.34 a share Aug. 25, its lowest point since it went public in February.

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