Martha Stewart Omnimedia's stock price has been surging as Martha Stewart's release date approaches, but that run-up appears to have ended as a number of key market analysts have turned negative and are making sell recommendations. Why?
MSO continues to lose substantial amounts of money, mainly in two areas. First, the TV side suffered when Martha's shows were cancelled during her incarceration. It's possible that Martha's release may turn things around there, but several questions must be asked: (A) How much will MSO benefit from Martha's participation in Trump's new version of The Apprentice? (B) How quickly can they get Martha back on their air in cooking and other lifetyle programming owned by MSO?
Second, and perhaps more crucially, MSO's magazine publishing is hurting big time with major declines in both circulation and ad revenues. It's not at all clear that Martha's release will turn things around. Unlike the TV shows, which depended on her being available for taping, her absence from the office didn't do anything obvious for the magazines. Instead, the magazine losses may reflect a long-term loss of fans and/or a decline in interest in lifestyle content generally.
My guess? If you bought MSO stock the day Martha got convicted and sold two weeks ago, congratulations. If you're still holding some, sell. If you're thinking about buying, don't!
