ASOS, a short seller's nightmare and potential dream.

ASOS is one of those stock market stories where you wonder how does it manage to maintain stock market gravity with its share price? For those that don't know it is an online fashion retailer listed on AIM. It has just announced its latest Christmas trading which on the surface looks good.

British online fashion retailer Asos on Thursday posted a 41 per cent rise in sales over the Christmas period as reduced prices lured shoppers.

Asos, aimed at twenty-somethings, said global retail sales in December climbed to £78.1m year-on-year for the month ended December 31st.

Christmas sales were strongest in the group’s overseas market with a 57% increase in the US and 42% elsewhere, while UK sales jumped 34%.

http://www.digitallook.com/cgi-bin/dlmedia/security.cgi?csi=38216&action=news&story_id=20629286

Its last pre-tax profit listed on DigitalLook was £13.24 million, in total for 2012 it was £47.59 million and expected to grow going forward, ASOS is a retailing success story. However, its share price stands at 2714p, P/E over 90 and a market cap of around £2.225 bllion! That's a market cap that would put it in the top 50 of the FTSE250.  Well known competitors Debenhams currently has a market cap around £1.300 billion, Brown N Group, just over £1 billion, ASOS is valued at just about the same as both of these put together. And although in a totally different retailing sector, Dixons is valued at £986 million.

Still, despite the valuation it has been a bit of a nightmare for anyone wanting to short it. There is lots of good news and sentiment in the price, but with that valuation it needs to continue to grow and impress, one bad result or perceived poor showing could see this one go south big time. For now however, you need pretty deep pockets to short this one with any confidence and if you are a bull, deep confidence to be sure it can keep going.

A good analysis can be found here;

http://tradingresearchpoint.co.uk/2013/01/18/asos-trading-statement-evil-knievil-and-the-bears-will-carry-on-getting-burned/