A couple of developments after Daktronics’ earnings call going concern surprise.

Class action law firms are circling.

When any public company makes a big negative announcement, the class action law firms emerge from their burrows to compete for shareholders who feel they were injured by the announcement.  Here is a partial list of attorney firms investigating Daktronics which we found through press releases:

• Pomerantz LLP
• Johnson Fistel, LLP
• Bronstein, Gewirtz & Grossman, LLC
• Glancy Prongay & Murray LLP
• Howard G. Smith
• Bragar Eagel & Squire, P.C.
• Lowey Dannenberg P.C
• Frank R. Cruz
• Rosen Law Firm
• Berger Montague

Daktronics Stock has rebounded.

When Daktronics made their December notification of their delayed earnings announcement and potential going concern status, their stock took an immediate drop from $3.32 to $1.75 a share.  The stock has recovered by about two-thirds since then, which suggests a market overreaction and subsequent correction after investors realized a “going concern” notice is not the same as “going out of business.”  Daktronics has good products, a record backlog and and a temporary liquidity problem.   The liquidity problems are manageable.

Billboard Insider’s take:  Legal distractions don’t help, but Daktronics will thrive if it focuses on diversifying funding sources and turning orders to cash.

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