Party City Stock Deflates After Earnings

The retailer's fourth-quarter earnings and revenue reports fell well below analysts' expectation

It looks like the fun may be over for Party City Holdco (NYSE:PRTY) as it heads deeper into penny stock territory today, down 48.6% at $0.66 and earlier opened at a new record low of $0.54. This deepening spiral comes after the firm reported adjusted fourth-quarter earnings of 51 cents per share, well below the 88 cents per share expected by analysts. Party City's $731.6 million in revenue also came in lower than expected, and to add insult to injury, the company lowered its full-year revenue and profit forecast. Meanwhile, PRTY's CEO Jim Harrison announced his resignation, with Party City Retail Group's CEO Brad Weston to take over.

Since suffering a massive bear gap in the wake of its November quarterly report, the shares of PRTY have been festering under the $3 region, with additional pressure emerging at the 80-day moving average in late-February. Plus, the security has only ended one of the last six days in the black, and was off 57.5% in the last month alone coming into today.

The dip hasn't brought any downgrades to the table, but it's certainly not out of the question. Two of the five analysts in coverage still consider PRTY a "buy" or better, and the consensus 12-month price target of $4.75 is at a whopping 600% premium to current levels.

Short sellers would be cheering today's dip, had Party City not just landed on the short-sale Restricted (SSR) list today. While short interest has ebbed in the past two reporting periods, bears are still firmly in control. In fact, the 15.03 million shares sold short make up a solid 17.6% of PRTY's available float, or nearly a week of trading at the stock's average daily pace.