Today’s Hot Topic: Retailer’s Shares Rise 45% in First Day
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Shares of Hot Topic Inc., the Pomona-based retailer of music-related apparel and accessories aimed at teenage shoppers, rose 45% in their first day of trading Monday.
Hot Topic stock climbed $8.125 to $26.125 in Nasdaq trading of 2.25 million shares, making it the second-largest percentage gainer in U.S. markets.
“These guys eat and sleep MTV,” William Chenoweth, senior portfolio manager at Turner Investment Partners, said of the company’s management. “They’re right now hitting a niche that’s in great demand, and that’s the teenage market.”
Hot Topic sold 1.3 million shares, or about a 30% stake, at $18 each to raise $23.4 million in its initial public offering. The company, which sells items ranging from its Morbid Metals body jewelry to Mr. Bubble T-shirts at 62 stores nationwide, was expected to sell the shares at $14 to $16.
In the six months ended Aug. 3, Hot Topic’s loss narrowed to $93,000 from $582,000 in the year-ago period. Revenue doubled to $15.4 million from $7.65 million.
The company has stores in shopping malls in the West, Midwest and Northeast, including 20 in California and seven in Washington.
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