Did you notice that at a point, people were buying bankrupt stocks with the aim of….. Ok, I do not know what their aim was but the stocks shut up really high to about 1000% which really see as absurd. Normally when companies go bankrupt, their stocks end up crashing to the ground as people do not see any reason to buy the stocks since the company do not have any product again but a list of companies that filed for bankruptcy didn’t see the same result after filing for bankruptcy.
During the pandemic, companies like Hertz, JC Penney and Chesapeake Energy filed for bankruptcy and for a while, their stocks went down but soon it shut up thanks to retail traders. It was traced that no hedge fund or registered company for trading were responsible for this highs (Does that mean that I can trade better than the hedge funds? Well, I can’t answer for you, but I will advise you seek a financial advisor before investing).
Is this a rowing boat?
Row row row your boat… with the economy gradually opening, people are scared of having a second lockdown period so I guess a lot of people are betting on the stock market and most of these people are retail day traders and this retail traders are concerned with daily profit and getting rich quick. When Hertz and JC Penney went bankrupt, it became a playground for traders to put their money into and make immediate money, like money doubling, tripling, or whatever you call it, and the stock went up to about 1000% with simple buying and selling.
Will Christmas continue forever or will winter come
Winter is coming!!!! For sure, this stock will get delisted soon or will crash when the company produces excess new stocks to render the of the old stocks obsolete which means the market will crash. There is only one hope for this traders is that the stock doesn’t crash when they buy into it or it doesn’t get delisted before they sell but the truth is, it will surely do one or both of this.
Who wins the game?
On a normal ground, the losers of this game are those who sell last because of greed but in this case it looks different. For a company like Hertz, the New York Stock Exchange sent a memo to them about delisting the stocks but Hertz have appealed delisting the stocks with the intention to sell 1 billion new stocks to traders who are willing to buy so the company could make money to pay its debtors. If the court accepts the appeal, then Hertz might not go bankrupt but if the court doesn’t accept the appeal, it will become a game for the fastest and the less greedy.