Investools Hit By Double Whammy (SWIM)

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Investools Inc. (NASDAQ: SWIM) is under serious fire this morning from traders.  The company posted net income of $0.17 EPS, but First Call was at $0.21 EPS.  This is on a record revenue with a gain of 39% to $91 million. 

A miss on earnings is one thing, but this disclosure is something different entirely:

  • "The Company is cooperating with a non-public, informal inquiry by the SEC relating to representations by certain presenters in certain portions of their presentations at some of the Company’s seminars. The Company has been cooperating with and intends to continue to cooperate with the SEC. Because it is ongoing, the Company cannot predict the outcome of this informal inquiry at this time, and, as a result, no conclusion can be reached as to what impact, if any, this inquiry may have on the Company or its operations."

This stock rose exponentially over the last 4 and a half years and had gone more range bound over the last year-plus.  An SEC inquiry after a miss is not going to be welcomed by any stretch of the imagination.

Shares closed at $12.48 and the 52-week trading range is $9.29 to $18.23.  Unfortunately, that was the 52-week trading range.  Shares are now down almost 35% pre-market at $8.20 on very active volume of more than 500,000 with an hour to the open.

Depending on what these position claims are, this will either end up with a slap on the wrist… or a kick in the you know where.  So far traders are kicking.

Jon C. Ogg
May 2, 2008