Investors are taking a new shine to online jewelry auction company Bidz.com Inc.
Bidz, which trades on the Nasdaq, was one of the LABJ Stock Index’s top gainers last week, with a share price increase of 15 percent. The stock closed at $1.38 on Feb. 2, up from $1.20 the previous week.
A recovery in consumer spending could be behind the rise for the Culver City company, said Frederick Moran, an Internet analyst with Benchmark Co. LLC in Boca Raton, Fla. Moran, who covered Bidz’s stock last year but no longer rates it, also said investors could be impressed that the company remained debt free during the recession.
“Given the consumer recovery, Bidz may have a chance for its revenue and profitability to eventually bounce back,” he said.
Analysts at Zacks Investment Research in Chicago had already upgraded their rating for company shares from “underperform” to “neutral” in a note to clients and investors in January.
U.S. Commerce Department figures show consumer spending rose 4.4 percent in the fourth quarter, the biggest jump since 2006. Should that trend continue, Bidz and other companies that count on discretionary purchases could be in for some gains.
Bidz, founded in 1998, sells mostly high-end jewelry and watches in online auctions that typically last less than one hour. It’s different from eBay, which lets people sell their own goods in auctions that can continue for days or weeks. Bids on Bidz start as low as $1 but climb quickly.
The company reported a net loss of $614,000 for the third quarter last year, wider than its net loss of $58,000 for the same quarter in 2009.
Leon Kuperman, president and chief technology officer for the 160-person company, attributed part of the loss to the recession.
“The majority of our sales are in jewelry and watches,” he told the Business Journal. “In this economy, they’re discretionary items that are lower on the list for consumers.”
The company also spent a lot of money to develop a new website last year, Modnique.com, which could account for the wider net loss, he said.
In 2009, Bidz was hit by four lawsuits after allegations of bid-rigging. One was settled and one was dismissed; two are outstanding. The Securities and Exchange Commission is also investigating the company. Kuperman maintains that Bidz is not at fault.
In the meantime, he said he doesn’t expect the recession or the company’s legal troubles to affect its business this year.
“We’re pretty optimistic in 2011,” he said. “We’ve been having conversations with institutional investors and they’re in it for the long haul.”
