Ride Snowboard Stock Headed For Tumble? Expectations Shush Ahead Of Company’s Performance

Ride Snowboard Co. is either the hottest company in the coolest sport in America or just another over-priced stock.

The Preston, Wash.,-based snowboard maker was one of 1994’s best-performing initial public offerings, according to Securities Data Co., leaping 338 percent during the past year.

Ride Snowboard shares benefit from a national surge in snowboarding, which combines elements of surfing, skateboarding and skiing. With their feet strapped to a board made of wood core, plastic foam or fiberglas, about eight inches wide and anywhere from three to six feet long, snowboarders careen down ski slopes at speeds of about 60 miles an hour, using bumps to get airborne or coasting down powdery hills.

One of the fastest-growing sports around, snowboarding attracted an estimated 2.1 million Americans last year, up from 1.45 million in 1990, according to Ski Industries of America.

Ride Snowboard shares went as high as 31 5/8 on June 7 from a low of 4 3/4 shortly after going public in May 1994. They closed at $22.50 Friday.

“It’s a wonderful company but expectations are getting well ahead of the stock,” said Craig Johnson, chief investment officer of Leonetti & Associates Inc.

His firm recently cut its stake in Ride Snowboard to 11,100 shares from the 25,000 it bought in October at an average cost of $10 a share.

Other fans of the stock also have hedged their bets. James Oberweis, president of Oberweis Asset Management, and David Como Sr., director of research at Trainer Wortham & Co., also about halved their holdings after more than doubling their money.

Ride Snowboard executives also sold shares last month, though insiders still control more than 50 percent. They say they sold to make more stock available to big investors. The stock’s “float,” or shares readily available for public trading, is a puny 1.5 million shares. Ride says it may increase the float by splitting the stock or selling more of it in a secondary offering.

Ride Snowboard, founded in September of 1992, is the only publicly traded maker of snowboards. It came public through the sale of 500,000 units at $10 apiece. Each unit comprised two shares and a warrant to buy a share for 7 1/2 until May 6, 1997. The units stopped trading in March, leaving markets in the stock and warrants.

Ride’s price-to-earnings ratio is well above those of other leisure companies. First Team Sports Inc., a mak er of roller skates, and Cannondale Corp., the bicycle maker, trade at about 17 times earnings.

“The easy money has been made” in Ride Snowboard stock, said Mark Leslie, an analyst at Dain Bosworth Inc. But he still tells customers to buy it.

Ride will earn $3.9 million, or 91 cents a share, on revenue of $62.6 million in 1995, Leslie estimates. That’s more than double 1994’s net income of $1.87 million, or 55 cents a share.

Next year, Leslie estimates, earnings will increase by 42.6 percent to $5.56 million, or $1.24 a share, on revenue of $82.2 million. All Leslie’s per-share estimates are based on 4.3 million shares outstanding.

Other analysts are not so optimistic.

“Snowboards have taken off because of the youth market, but the sport will fizzle, the same way the ski market fizzled,” predicted Forbes Tuttle, analyst at The IPO Value Monitor. “The stock has gone up more than two and a half times and clearly, that’s a speculative bubble.”