I am ignorant of the stock market, but being in the jewelry business and hearing good things about the Knot from clients getting married, and seeing it recommended in the top 100 by Investors Business Daily and the Motley Fools, I bought it around 30. The next day it started falling and is now about 19. My ability to understand why this happened is limited by my ignorance of the stock market.Can anyone explain what happened to the KNOT other than everybody decided to sell it and move on to somethig else.
Hi MAH35,I am relatively new to investing to, but have been following the Knot for about a year. The company has been growing at a very fast rate and seems to have tapped into the wedding industrial complex. The company has a bright future. But when the stock was priced at 30, the stock had a price to earnings ratio close to 100. Basically that means the stock was very expensive, most large cap stocks trade with P/E ratios of 15 - 25. The reason it was priced so high is that investors think that this company will grow fast and for a long time. Unfortunately for you the company's latest finantial release indicated that the growth of the company had slowed over the last quarter. This spooked investors, many of whom decided to sell because they could take a nice profit when the stock was up at 30. So I guess what you have to decide is will this company continue to grow as it has over the past several years, or was this last quarter an indication that the Knot will no longer grow at a fast rate. Several things that you can consider are, who is the competition? is the industry as a whole slowing down? a couples going to other sites for their wedding planning? It tough when a stock you bought drops suddenly. But if you still feel confident in the company, this is a chance to buy the stock because it is now much cheaper.I hope this helps.jmel
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