Loser of the Day: BIDZ.com

How BIDZ.com, Inc. (NASDAQ:BIDZ) ever got up to $22 a share is beyond comprehension. Shares of the lame online retailer are down 11% (in the $10 range) after reporting earnings yesterday. Even if Q1 was better than expected and guidance is in line, with the popular Short position, how do you play this stock?

Q1 2008 revenue came in at $61.9 million and EPS of 18 cents a share, above its previous guidance of $59 to $61 million in revenue and profits of 14-16 cents a share.

Bidz.com Inc reduced inventory in the quarter to $34.8 million from $56.7 million a quarter earlier. 

Q2 the company expects revenue of $48 million to $50 million, with EPS of 9-11 cents a share. Above the analyst expectation of $47.98 million and 10 cents.

Bidz.com repeated its previous 2008 guidance of revenue of $225 million to $230 million. It now sees profits of 52-55 cents a share; old guidance was 49-53 cents. The Street forecast $233.8 million and 53 cents.

Then there's the Short position according to TradingMarkets.com:  From May 2007 to May 2008 approximately 110.1 million total aggregate shares of BIDZ have traded for a total dollar value of nearly $1.4 billion. The total aggregate number of shares shorted in this time period is approximately 17.1 million shares.  There are currently 3.42 million shares of total short interest (nearly $40 million) that still need to cover. According to data provided by the SEC, as of November 29, 2007, there were 1,263,401 shares failing to deliver (also referred to as, naked short selling).

Masters, this stock has been all over the place in the past year and worse in the last few months:

Investors hoping to benefit from a short squeeze could get stuck in watching shares fall beneath a 52-week low.  This stock just has too much manipulation for any sane investor to play it, unless you plan on watching the stock every 5 seconds.

One thing I do like is BIDZ said it bought back 869,000 shares at an average price of $8.45 for the year through April 30.

The best play on this stock (if anything) is to wait for some 5% direction in either way, then make a bet.  Better yet, avoid the stock and the entire online sector.

Disclaimer: No positions in BIDZ.com