JAKKS Pacific, Inc. (NASDAQ:JAKK) Continues the Rally This Week

[[tagnumber 0]]JAKKS Pacific, Inc. (NASDAQ:JAKK) surged for another session yesterday with the trading volume climbing slowly up. Today the stock gained more at market open, however, the company‘s recent financial reports show it still has heavy debt that can bring the share price much lower on the long–term.[[tagnumber 1]] [[tagnumber 0]][[tagnumber 3]][[tagnumber 1]] [[tagnumber 0]]JAKK closed Wednesday session at $9.31 on a trading volume for the day of around 580,000 traded shares which is only slightly higher than the average for the stock. Technically, the chart still looks bullish which implies JAKK could well jump higher across the upper Bollinger band and hit another new high.[[tagnumber 1]] [[tagnumber 0]] [[tagnumber 1]] [[tagnumber 0]]The company‘s 10–Q for this year‘s first quarter showed impressive growth in total sales due to the increased unit sales of dolls and accessories, gross profits also increased significantly compared to the first quarter of last year. Yet, JAKK had again to report a net loss although the operating cash flow was positive.[[tagnumber 1]] [[tagnumber 0]]It looks like JAKK has managed to reduce the current costs related to its debt as well. Earlier this month, JAKK changed again its credit line agreement with General Electric Capital Corporation from March last year.[[tagnumber 1]] [[tagnumber 0]] [[tagnumber 1]] [[tagnumber 0]]The amended terms extend the maturity date and reduce the interest rates, however, on the other hand they also require JAKK to extend the due date or to refinance its outstanding 2018 convertible notes. According to the last 10–Q, JAKK has in the past few years refinanced its convertible notes through the issuance of new convertible notes bearing higher interest rates.[[tagnumber 16]][[tagnumber 1]] [[tagnumber 0]]Currently outstanding 2018 notes are convertible into shares at a price of $8.74 per share. That means, if JAKK does not have enough cash to repurchase some of its stock as it did last year when issuing the 2020 notes, shareholders might expect a higher rate of dilution.[[tagnumber 1]] [[tagnumber 20]] [[tagnumber 1]]