I have less of a story and more of a question. How does a stock typically perform when not able to come out of bankruptcy but has to look to a high bidder to sell to? I know buying penny stocks is a gamble that is why I didn't invest more than I was willing to lose. I bought aeropostale (aropq). I knew they were going in to bankruptcy. I was betting they could reorganize and come out of it. But that seems not to be the case. They are going to auction off their assets to hopefully to a stalking horse. So should I wait to see who the buyer is or dump it now and take my losses? I missed a quadrupling of the stock. I didn't have my trade station up because I was moving my store from one location to another. But it came back to to .08 and I was still double my money. I should have sold then. But I wanted to see where it was going to go and then on Monday it tanked and now it is below 0.3. So they will line up the auction, what typically happens to stock prices when an auction sale happens? Does it depend on they quality of the buyer and what they want to do with the assets? Should I double down on the amount of shares now that it is about half the price of what I initially bought it at?
Stocks in bankruptcy are not going to make you money. When or if they do come out of bankruptcy, they do so by restructuring, which means the current shares are worth zero. New shares are issued, or best case you get some sort of exchange, like 1 share for every 1000 of the old ones you held. The stock may bounce from 3c to 10c or even 30c for no reason other than people are trying to play the ups and downs. There is no fundamental reason for the moves, just short covering, momentum traders and rumor mills.
Thanks Gil. I guess I will have to try and use the momentum of the stock to try and claw back some gains. Live and learn. I learned don't buy a company going into bankruptcy.
Ive seen plenty of traders make good money from trading a bankrupt company, but its simply gambling and luck!
WAMUQ paid for a couple new cars...........but Gil is right...it sure ain't investing. But most penny stocks are gambling. Not all...but most.
