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Movie Gallery Temporarily Spikes

23 Feb, 2006 By: Holly J. Wagner

Movie Gallery shares spiked 17.1% Feb. 22 on rumors that a takeover was afoot or insiders would take the company private, but the 52-cent gain quickly eroded Feb. 23 after analysts deemed it unlikely.

According to Yahoo!, 68% of Gallery's shares are short-traded, meaning investors are gambling that the price will go down.

Wedbush Morgan Securities analyst Michael Pachter called it “a bad rumor” and said the company's $1.1 billion debt load makes it an unlikely takeover target. Movie Gallery is in a quiet period while the company renegotiates the terms of its debt.

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