My friends analysis of why he bought CROX and why it went up 20%...

[ski]

*Anyone care to comment on this analysis? Is this sufficient information to buy a stock? Do you feel he touched on all the main reasons the stock went up? FWIW he told me all this before the stock skyrocketed.

The reason the market didn't like it was because they are butt ugly (go to the web site). They are plastic, colored beach shoes mostly for kids. The general thinking was that this is a summer fad. Once it gets "old", it will die very quickly and CROCS will not become a major shoe distributor.
Basically market thought it was a flash in the pan fad and when the stock was high, the pro's shorted it and just waited for the fall expecting to make windfall profits when the stock went to zero.

Why they were wrong. As I read up on it I learned several things. First they exceeded market expectations with every quarterly report. They basically sandbagged the predictions so they could beat them. But they beat them pretty good each time. Second, as I read up on them, I found they were not
plastic but a proprietary resin which CROCS bought the patent for. The resin molds to people's feet, so the shoe is extremely comfortable. Second, the resin is waterproof, so they are perfect beach shoes. Comfortable, you can
get them wet, sand goes out through the holes...perfect for the beach.

Next, they are skid proof. Perfect for boating. AND I read where orthopedic surgeons were wearing them during surgery AND prescribing them as orthopedic shoes for advanced diabetics who often end up needing amputations because their feet and legs decay. Next, they got licensing agreements with MULTIPLE corporations including colleges, NASCAR and the NFL. Probably others too. What that means is that they will eventually come out with CROCs for U of I, CROCS for Ohio State, CROCS for Green Bay Packers, etc. Basically CROCS in team and college colors. That will more than likely get the college kids to wear them and thus start a college fashion trend. I also checked stores. I had (a friend from U of I) call stores and visit them in Urbana and ask about CROCS sales. They ordered loads.

I went to the Carribean on the cruise. Every shore excursion I went to several stores and asked about CROCS. They couldn't order enough. In most shops it was their largest profit makers. Also, I asked Linda the school teacher girlfriend to let me know if her kids
stopped wearing CROCS (sign of a fad). She said they loved them and wore then to school as soon as it got warm (fad not dead). Also, on the Rosie O'Donnell birthday show, she gave all her audience a present...2 pairs of CROCS. Finally, I knew the short sellers would get squeezed. What that means, when you go short, the higher the stock goes, the more you lose. Just like you have a stop sell lower than what you bought a stock for when you go long, so short sellers have stops to BUY a stock if it goes up. Just normal stop management except on the short side. But what that means is, when a stock reaches a short sellers upside pain threshold, they have to buy the stock to cover their short. This helps to raise the price. So the price gets another upside goose, and now the next short seller's stop is hit. On it goes in a wonderful domino effect until all the stops are taken and the stock reaches a zenith. I knew this would occur during CROCs earnings call, since I knew after talking to everyone they would kill the earnings expectations. I sold because the stock went up like 20% and all the short sellers stops were hit.

The stock should be at a temporary high and start to pull lower. I mean, with these results and how much the stock went up, what is left for upside?