Why is Headphone Maker KOSS Stock Surging this Week?
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Why is Headphone Maker KOSS Stock Surging this Week?

Will Koss headlines surge the company's headphone sales as a self-actuating prophecy?
Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.

Koss Corporation (NASDAQ: KOSS) stock has been exhibiting the behavior of a meme stock in the best way possible, but there are no signs of a dump yet. Over the last three months, KOSS shares have now returned over 500% of shareholder value, going from penny stock territory of $2.5 to present price of $15.36 per share at press time. 

Most gains of over 250% happened since Wednesday, July 3rd, making it the next big meme stock. Compared to the 65-day trading volume of 1.93 million, KOSS stock churned 70 million trading volume that day. Out of the 5.22 million public floats, only 7.74% is shorted.

The question is, does the headphone maker warrant such interest, and how did it arise?

What is Koss’ Bottom Line?

Although less known than Sennheiser, Audio-Technica, or Beyerdynamic, Koss covers the entire spectrum of customer segments. The Wisconsin company sources high-quality, budget-friendly, professional, and audiophile components to deliver over-ear, on-ear, earbuds, wireless headphones, and accessories.

With a 60-year history, Koss was the first audio company to commercialize the high-end electrostatic (ES) series in 1968. Various brands have received high praise over the decades, often found across RadioShack’s consumer electronics retail chain.

Koss exited 2023 with $13 million in net sales, 26% less than in the previous fiscal year. However, Koss’s net income rose significantly during the period, from $1.26 million in 2022 to $8.3 million in 2023. A glance at Amazon reviews of Koss headphones tells a story of 4.5 stars out of 5 on average across the product line.

Michael J. Koss, the son of founder John C. Koss, noted that pricing on the higher-end products offset the inflationary and labor costs despite a near-4% decline in gross margins. In May’s Q1 earnings ending March, Koss reported a 22% decrease in net sales from the year-ago quarter.

This leaves the company’s price-to-earnings (P/E) ratio in dubious waters. However, Koss has ample runway ahead with a price-to-book (P/B) ratio of 3.16. As of the Q1 report, the company’s cash (and equivalents) reserves are effectively the same as in the year-ago quarter, at $2.9 million. At the same time, Koss’ total liabilities decreased from $7.28 million to $6.48 million.

Koss Meme Stock Speculation

Like GameStop (NASDAQ: GME) and AMC (NASDAQ: AMC), many attempt to decipher the meaning behind Keith Gill’s meme-loaded account on X (Twitter) under Roaring Kitty. As of yet, there is not a single mention of Koss on his entire timeline. 

Nor did he mention audiophiles, headphones, or any number of derivations.

Unlike Chewy Inc. (NASDAQ: CHWY), which could be portrayed as a reference via Gill’s dog image on June 27th, Koss-related references in meme format are also lacking. In other words, retail interest in KOSS shares is riding on its penny stock potential, which doesn’t take much-organized poking.

According to Yahoo Finance data, insiders hold 45.34% of KOSS stock. Only 11.86% of the public float is held by institutions, of which the top three are familiar names: Vanguard Group (2.84%), Dimensional Fund Advisors (1.47%), and Blackrock (0.67%). 

Koss CEO Michael J. Koss made the latest insider move on May 30th, selling 15,000 shares. At the time, the KOSS stock price was $4.62 per share. 

Do you think the Koss brand will now become as popular as Audio-Technica? Let us know in the comments below.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.