This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Market Missing Point on Blockbuster?

(Blockbuster article updated from Jan. 28 with new Blockbuster stock movements.)

NEW YORK ( TheStreet) -- Blockbuster (BBI) stock is continuing to rally, regaining some of its huge losses from the last four months, a day after it was reported that rival Movie Gallery could file for bankruptcy as early as next week.

Shares are soaring 12.5% to 45 cents in Friday afternoon trading.

As part of the bankruptcy restructuring, Movie Gallery could close roughly 1,800 stores, or two-thirds of its outlets, leading to significant layoffs, sources told the Wall Street Journal.

This would be the second time in two years the company has sought bankruptcy protection from creditors.

The prospect of a thousand stores being eliminated from Movie Gallery's portfolio, which includes Hollywood Video stores, is a tiny consolation for investors.

But as investors are making hay off the upside of the news, there is, of course, the potential downside to consider -- that Blockbuster could suffer the same fate as Movie Gallery.

In fact, buying Blockbuster on Movie Gallery's troubles is naive, Edward Neiger, bankruptcy attorney and founder of Neiger LLP, says.

"This is more of a negative than a positive for Blockbuster," he says."When Microsoft (MSFT) has a bad day, it doesn't mean you should run and go buy Apple (AAPL). When Microsoft is down it pulls down the rest of the technology sector."

Last week, Blockbuster said its fourth-quarter earnings came in significantly lower than expected due to weak holiday sales.

Blockbuster now expects a loss between $183 million and $193 million.

Shares of the company lost as much as 35% on the announcement.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
NFLX $106.11 0.00%
AAPL $110.38 0.00%
FB $92.07 0.00%
GOOG $626.91 0.00%
TSLA $247.57 0.00%


Chart of I:DJI
DOW 16,472.37 +200.36 1.23%
S&P 500 1,951.36 +27.54 1.43%
NASDAQ 4,707.7750 +80.6910 1.74%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs