The stock went public at $24 after having raised $6 a share in cash. The company did fine for four years, ran profitably, saving its pennies. But it grew too conservative. It didn't take any risk on new product or marketing ventures. It just sat there after having saved $5 more in cash, so it had $11 in cash and no debt.
And then revenues declined. Profit margins went away as the world turned to competitive products and other ways to waste time. The company became hated by Wall Street...and worse: ignored.
So the stock drifted down and down and down...and now it trades at 8 bucks a share. That's $3 a share below cash, below the actual cash value of the country.
How can this happen? That's beyond insulting. Well, it turns out that investors believe that the company will never return to profitability, let alone breakeven. It'll just fade away to nothingness, so nobody wants to own it. If the new management team and board prove the Street wrong, shareholders can make bank. If they don't, well, they'll just die...slowly.
Related or Semi-related Video
Finance: What is Dead Cat Bounce?13 Views
Finance allah shmoop What is a dead cat bounce It
sounds like a dance move from the old west right
but it actually refers to a terrible situation when the
market plummets rebounds very slightly and then plummets again The
idea comes from the notion of dropping a cat off
of a high building It hits the cement dead bounces
a bit before then is a big wet thud Yeah
peeta no cats were harmed in the production of this
definition Thie market has fallen from five thousand twelve hundred
now it's at fourteen hundred and now it's back to
twelve hundred Yeah that uplift of two hundred points there
from twelve hundred fourteen hundred before it went back twelve
hundred which is the concrete that's the dead cat bounce
I'm not totally sure who came up with this term 00:00:50.247 --> [endTime] but wei have a pretty good idea
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