ZAGG Rises 17%, Concerns Remain (ZAGG, AAPL)

ZAGG Incorporated ZAGG has fluctuated wildly since Apple's AAPL release of the iPad 2 as traders questioned whether new features on the iPad 2 would affect sales of one of ZAGG's signature products. ZAGG sells the product ZAGGmate, a combination iPad shield and keyboard. It was recently promoted on the Oprah Winfrey show and appeared to be gaining market momentum, according to Seeking Alpha. The new iPad 2 was released alongside a line of magnetic covers to protect the iPad, targeting exactly the market where the ZAGGmate was beginning to excel. On initial news, ZAGG dropped fiercely yesterday to below $7 per share, where it had previously been trading around $9 before the announcement. Today, the stock rebounded 17% to $8.30, after ZAGG company spokesman Nathan Nelson remarked that the new iPad 2 cover does not replace the need for scratch protection on the device. ZAGG's products provide scratch protection for screens on mobile devices, most notably the iPad and the iPhone. Investors have been bearish on ZAGG, with the short interest as percentage of outstanding shares at nearly 25%, according to FactSet data. The sharp increase in stock price signals a renewed investor confidence that company sales won't suffer too greatly after Apple's new release of iPad 2 covers. That being said, questions remain as to the company's efficacy. ZAGG's excess inventory is being liquidated at below normal prices, and company insiders have been making large insider sales in recent months, While it is still unclear how this situation will resolve itself, expect continued volatility in ZAGG shares in the coming months.