Price Target: ZeroĪre these traders trying to catch one of those 10% moves for a quick turnaround? The sharp price moves are undoubtedly part of this stock’s appeal. The daily trading volume on Chesapeake shares has remained shockingly robust. However, some incautious traders haven’t been deterred. Reverse splits are often a telltale sign that a stock is falling fast and needs an artificially induced price bump just to look respectable.Īfter all, $9 billion in debt is nothing to sneeze at, and the words “going concern” should deter any prudent investor. regulators there was ‘ substantial doubt about the company’s ability to continue as a going concern.'”Įach of those events could be considered a deal-breaker for prospective Chesapeake investors. “Over the last few weeks, the company underwent a 200:1 reverse stock split. InvestorPlace contributor Ian Cooper did an excellent job of summarizing the flurry of miserable events: The period of May through July hasn’t been great for Chesapeake Energy. And on a fundamental level, as we will see, there’s hardly any justification to own the stock at all. Thus, Chesapeake shares are very challenging to profit from even for experienced technical traders. So, even if the share price gets to its lowest point of the past month or two, there’s no reason to believe that it won’t just keep on falling. It’s an unpredictable stock as the price moves don’t seem to be contained within any discernible range. Indeed, just in the first half of July, the shares were as low as $4.25 and as high as $9.11. The price action on July 17 is a case in point as the shares closed 10% higher on that day with no particular catalyst.īut just as Chesapeake stock can move 10% higher in a day, it can move that much lower as well. If volatility is a friend to gamblers, then Chesapeake stock offers a very risk-friendly profile. Unless you’re a very short-term gambler, you’ll likely find scarcely any reasons to take a stake in this bankruptcy stock. But then, a truly cautious investor probably wouldn’t take an interest in Chesapeake in the first place.Īs a warning to anyone considering a long position in Chesapeake shares, we’ll take a look at what the company’s so-called “restructuring” really means. The fact that Chesapeake stock was basically demoted from the New York Stock Exchange to the OTC markets should be a red flag for cautious investors.

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