Four days ago, mattress maker Select Comfort
(Nasdaq: SCSS) lost 22% of its value in a single afternoon of
furious selling. But the
Hidden Gems selection had not turned in a poor earnings
report or warned of flagging sales. Instead, a local St. Paul, Minn.
television station had aired a story about some mold found inside a
mattress.
In one of my pre-Motley Fool careers, I was a news assignment editor
for a local TV station (that was right after I'd been the sports
director/weekday anchor, and right before I ran a print shop at a horse
racing track). So I know a little bit about what makes for a newsworthy
story.
I watched the mattress story from the link provided on our Hidden
Gems Select Comfort discussion board. When the KSTP-TV reporter was
about to peel back the adjustable air-chamber mattress top in order to
reveal the mold, it was a dramatic moment. I was expecting to see
something out of a Stephen King horror novel... some kind of hairy,
grotesque monstrosity that would send the reporter running out of the
house, screaming. Something so terrible you wouldn't know whether to
shoot it or mow it.
Now, I must admit I watched this video on a computer monitor, and the
resolution wasn't great. But I couldn't see anything -- maybe
just some discoloration, but that was it. Unless I couldn't see because
of the poor quality, this was one of the most laughable things I've ever
witnessed on a big-market TV station. If a reporter had brought this
video back and showed it to me when I was an assignment editor, I would
have killed the story before she wasted her time putting it together.
Select Comfort's management pointed out the next day that mold is not
a significant problem and affects only the tiniest fraction of its
customer base. Indeed, its mattresses are likely to be a benefit
in a mold-friendly home, because the tops can be unzipped, peeled back,
and cleaned.
It's telling that this story was not picked up by any other news
outlet (except for a couple of Minneapolis-St. Paul publications, where
Select Comfort is based). Unless there's something else going on here
-- beyond the small amount of discoloration shown in the TV report --
this is essentially a non-story. Is it news if someone finds a small
amount of mold in a Dell
(Nasdaq: DELL) computer or inside a Nokia
(NYSE: NOK) phone? Would that indicate a faulty product or just a
moldy climate?
If indeed Select Comfort's products are no more affected by mold than
traditional mattresses -- if they're actually better in helping
fight mold -- then this is just an undeserved, short-term blip in the
company's stock price.
