The 5 Dumbest Things on Wall Street This Week: Oct. 25
4. Penney's Panic
Yep, seeing septuagenarians tinker with technology sure is adorable.
Watching 110-year old J.C. Penney (JCP) get washed away by Twitter attack, well, not so much.The struggling retailer's stock got slammed last week, tumbling 8.9% on Oct. 15 and 4.8% on Oct. 18, following a pair of anonymous Twitter posts saying it had hired a bankruptcy attorney and lost access to credit in Canada. J.C. Penney put out a statement Oct. 15 dismissing the bankruptcy rumors and three days later attempted to fight fire with fire by posting on Twitter a rejection of the Canadian credit report story. "It's certainly gotten to the point where the market manipulation has become so prevalent that we felt it was appropriate to speak out on Friday," Kristin Hays, a J.C. Penney spokeswoman, told Bloomberg. "We took to social media to fight back in their space." Darned right you did, Kristin. Too bad your Twitter counterattack proved anything but productive. Shares of Penney remained below $7 despite the company's denials, a level not seen since 1980. Look. Our friends at Penney's didn't really need the assistance of some nameless, faceless bears to drive their stock down. They've been destroying their own market value quite well on their own, from Ron Johnson's disastrous reign as CEO to Mike Ullman's unconscionable decision to sell $785 million in stock a mere month after he said he didn't need to raise additional money. Still, if we are forced to see the once-iconic Penney's in pain, we would rather it be as a result of tangible self-inflicted wounds than Twitter subterfuge. As much as we love spotting dumb things, we frankly find all this Twitter fraud off-putting. Unfortunately, its reached a level where it's hard to regulate and even harder for real investors to ignore. Imperial Capital analyst Mary Ross-Gilbert, for example, cut the retailer's price target to $1 from $5 on Monday, saying that while she believes the slew of negative reports "may be inaccurate or potentially misleading," they seem to be "wearing down vendors and management." We honestly don't understand how analysts can calculate "Phony Tweet Exposure" in their equity pricing models, but apparently it may soon become a necessary formula in their Excel spreadsheets. And it's certainly something to think about if and when JC Penney becomes a penny stock.
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