Tag: Stock delistings

WeWork’s stock has continued the strange trend of the bankruptcy bounce

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In a strange flashback to the demise of Bed Bath & Beyond Inc., WeWork Inc.’s stock soared on its over-the-counter debut this week, just days after the office sharing company filed for chapter 11 bankruptcy protection.

WeWork
WEWKQ,
+23.02%
filed for Chapter 11 in New Jersey on Monday and the beleaguered company’s stock was halted before the open that day. The New York Stock Exchange started the delisting process for WeWork that same day.

Trading resumed over the counter on Wednesday, with WeWork shares ending their first session as an OTC stock up 91.5%.

WeWork Chapter 11 a meme stock reality check: ‘No one should ever buy a stock that is rumored to be headed to bankruptcy’

A similar scenario happened when shares of Bed Bath & Beyond began trading over the counter in May after the Nasdaq started the delisting process for the bankrupt home-goods retailer and sometime meme-stock darling. Despite Bed Bath & Beyond’s well-documented woes, the stock ended its first session as an OTC stock up 30.4%. Bed Bath & Beyond’s shares were canceled in September.

In June Overstock.com acquired Bed Bath & Beyond’s intellectual property, and began operating as Bed Bath & Beyond, before changing its corporate name to Beyond Inc.
BYON,
+2.06%.

Like Bed Bath & Beyond, WeWork has continued to attract investor attention even as the company’s problems mounted. In mid-September WeWork’s stock saw a record run-up amid meme stock chatter, just weeks after WeWork warned that it may not be able to stay in business.

Related: WeWork files for bankruptcy, capping a stunning downfall

Users on social media noted the activity in WeWork’s share price this week, with Twitter user @asunapg warning Thursday that the OTC markets are “much more volatile and often a death trap for a lot of companies.”

“Here we go again” tweeted @B2Investor Friday, with popcorn and clown emojis.

WeWork’s stock ended Thursday’s session down 21.3% and the stock is down 12.7% Friday, compared with the S&P 500 index’s
SPX
gain of 1.3%.

Related: Why investors gamble on shares of bankrupt companies — Bed Bath & Beyond, for example

Tom Bruni, head of content at StockTwits, a social platform for investors and traders, told MarketWatch that, from what he is seeing, there doesn’t seem to be broad interest in the stock.

“Unlike Bed Bath & Beyond and others where it seemed possible to restructure and continue operating, the current situation for WeWork is mainly a math equation,” he told MarketWatch. “It’s looking most likely that it’ll be bought out, the question is at what price and how much cash (if anything) does that leave for common shareholders to receive? The consensus right now is that all value from its 52 million shares of common stock will be wiped out.”

Set against this backdrop, short covering could be driving the stock price up in the short term, according to Bruni. “Many market participants don’t want to risk being squeezed by unexpected good news, so they’d rather take their gains than ride it all the way down to zero,” he said. “Should that high short interest start to create sustainable upside momentum (more than a few days), then we’d likely see other traders get involved on the long side.”

“But for now, with earnings season in full swing, there’s plenty of volatility and news elsewhere for investors/traders to focus on,” he added.

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November 10, 2023
U.S. banks and regional lenders slide across the board as S&P is latest to downgrade ratings

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U.S. banks and regional banks fell across the board on Tuesday, after S&P Global Ratings downgraded five smaller players after a review of risk related to funding, liquidity and asset quality with a focus on office commercial real estate.

Adding to the gloom, Republic First Bancorp. Inc.’s stock
FRBK,
-41.90%
tanked by 39%, after Nasdaq told the company that its stock would be delisted on Wednesday, after it failed to file its annual report in time.

S&P’s move comes just days after Fitch Ratings analyst Christopher Wolfe reduced his operating environment score for U.S. banks to aa- from aa due to the unknown path of interest rate hikes and regulatory changes facing the sector.

And Moody’s Investors Service just two weeks ago upset investors when it downgraded some lenders and said it was reviewing ratings on bigger banks, including Bank of New York Mellon
BK,
-1.71%,
State Street
STT,
-1.59%
and Northern Trust
NTRS,
-1.73%.

For more, see: Bank asset quality, weaker profits spark Moody’s reviews and downgrades as it weighs potential 2024 recession

The S&P 500 Financials Sector has fallen for seven consecutive days, and is on pace for its longest losing streak since April 7, 2022, when it also fell for seven straight trading days.

Individual bank names are also performing poorly, with Goldman Sachs Group Inc.
GS,
-0.94%
and Citigroup Inc.
C,
-1.68%
down for 10 of the past 11 days and Charles Schwab Corp.
SCHW,
-4.84%
down 11 straight days.

Goldman alone has fallen for seven straight days for a total loss of 6.3%. It’s the longest losing streak since Feb. 28, 2020, when it also fell for seven straight days as the pandemic was taking hold.

The KBW Nasdaq Regional Banking Index
KBWR
is down for 11 straight days. and the KBW Nasdaq Bank Index
BKX
is down for seven straight days.

S&P downgraded Associated Banc. Corp.
ASB,
-4.20%,
Comerica Inc.
CMA,
-3.82%,
KeyCorp
KEY,
-3.58%,
UMB Financial Corp.
UMBF,
-2.42%
% and Valley National Bancorp.
VLY,
-4.19%
by one notch and said the outlook on all five is stable.

Read also: More challenges await U.S. banks but analysts think the worst may be over for the year

The rating agency affirmed ratings on Zions Bancorp
ZION,
-4.17%
and maintained a negative outlook, meaning it could downgrade them again in the near-term. And it affirmed ratings and a stable outlook on Synovus Financial Corp.
SNV,
-3.37%
and Truist Financial Corp.
TFC,
-1.36%

“We reviewed these 10 banks because we identified them as having potential risks in multiple areas that could make them less resilient than similarly rated peers ,” S&P said in a statement.

“For instance, some that have seen greater deterioration in funding—-as indicated by sharply higher costs or substantial dependence on wholesale funding and brokered deposits—-may also have below-peer profitability, high unrealized losses on their assets, or meaningful exposure to CRE.”

The steep rise in interest rates orchestrated by the Federal Reserve over the past year has raised deposit costs as banks are now competing for savers seeking higher returns and that’s forced some to pay up on deposits and discourage their clients from heading to other institutions and instruments.

The sector has been skittish this year following the collapse of Silicon Valley Bank and other lenders that led to a run on deposits at a number of regional lenders.

However, S&P said about 90% of the banks it rates have stable outlooks and just 10% have negative ones. None have positive outlooks.

The widespread stable outlooks shows that stability in the U.S. banking sector has improved significantly in recent months.

S&P is expecting FDIC-backed banks in aggregate to earn a relatively healthy ROE of about 11% in 2023.

KeyCorp. and Comerica both fell more than 3% on the news. Of the two, KeyCorp. has more outstanding debt and its 10-year bonds widened by about 5 to 10 basis points, according to data solutions provider BondCliq Media Services.

As the following chart shows, the bonds have seen better selling on Wednesday with buyers emerging around midmorning.

KeyBank net customer flow (intraday). Source: BondCliQ Media Services

The next chart shows customer flow over the last 10 days.

Most active KeyBank issues with net customer flow (last 10 days). Source: BondCliQ Media Services

The next chart shows the outstanding debt of the downgraded banks, with KeyCorp. clearly the leader with almost $16 billion of bonds.

Outstanding S&P downgraded banks debt USD by maturity bucket. Source: BondCliQ Media Services

Don’t miss: Capital One confirms roughly $900 million sale of office loans as property sector wobbles

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August 22, 2023

UBS Expects to Complete Credit Suisse Acquisition, Delisting as Early as Next Week – Update

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By Pierre Bertrand

UBS Group said it expects to complete its acquisition of Credit Suisse Group and have the shares of the Swiss peer delisted as early as next week.

Upon completion, Credit Suisse will be merged into UBS and its shares and American depositary shares will be delisted from the SIX Swiss Exchange and the New York Stock Exchange, UBS said in a statement Monday.

If the acquisition is finalized before the opening of trading in the U.S. on June 12, Credit Suisse will de delisted in New York on June 12 and delisted in Switzerland on June 13, UBS said.

If the deal is finalized after the opening of trading in the U.S. on June 12, the delisting on the NYSE and the SIX will both occur on June 13, UBS added.

UBS, which received the European Union’s clearance for its takeover of Credit Suisse last month, said Credit Suisse shareholders will receive one UBS share for every 22.48 outstanding shares held and that it will assume all Credit Suisse Group assets and liabilities.

It added that Credit Suisse Group’s obligations under its outstanding debt securities will become UBS obligations.

UBS agreed to take over Credit Suisse as part of an emergency measure in March to shore up the troubled lender and restore confidence in the global banking system.

Write to Pierre Bertrand at pierre.bertrand@wsj.com

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June 4, 2023

China Sets New Rules for Overseas IPOs. What It Means for DiDi, Alibaba, and Others.

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China has announced new rules on overseas IPOs, potentially sparking the resumption of Chinese companies listing in New York.

Under the new rules, the China Securities Regulatory Commission (CSRC) will vet any overseas listing applications, effective from March 31. The regulator has the power to block such IPOs, and the rules make clear listings must not endanger national security.

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February 20, 2023
Bed Bath & Beyond stock plunges more than 20% after filing shows default on loans

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Bed Bath & Beyond Inc. shares plunged more than 20% and were halted Thursday afternoon, after the retailer disclosed in a filing that it was in default on loans that have been called in.

The struggling retailer finally filed its quarterly report with the U.S. Securities and Exchange Commission on Thursday at roughly 2:30 p.m. Eastern time, after being threatened with having its stock delisted for being late with the required report.

Included in the filing is news that Bed Bath & Beyond
BBBY,
-22.22%
had defaulted on loans earlier this month, and executives were informed on Wednesday by banker JP Morgan Chase & Co.
JPM,
+0.62%
that the debt was due immediately.

“On or around January 13, 2023, certain events of default were triggered under the Company’s Credit Facilities as a result of the Company’s failure to prepay an overadvance and satisfy a financial covenant, among other things,” the filing reads.

“As a result of the continuance of such events of default, on January 25, 2023, the administrative agent under the Amended Credit Agreement notified the Company that (i) the principal amount of all outstanding loans under the Credit Facilities, together with accrued interest thereon, the FILO Applicable Premium and all fees (including, for the avoidance of doubt, any break funding payments) and other obligations of the Company accrued under the Amended Credit Agreement, are due and payable immediately.”

See also: Bed Bath & Beyond bankruptcy warning marks latest chapter in troubled retailer’s downward spiral

Shares had traded between $3.25 and $3.47 on the day until about 5 minutes after the filing was released, when shares suddenly dove, triggering a halt. The stock fell as low as $2.10 and was halted three times between 2:46 p.m. and 3:14 p.m. before closing at $2.52, a 22.2% daily decline.

The struggling retailer admitted earlier this year that it has “substantial doubt” about its “ability to continue as a going concern” and may need to declare bankruptcy. The home goods retailer also said that it expects to record lower sales for the latest quarter than analysts were anticipating.

“As we consider all paths and strategic alternatives, we continue to work with our advisors and implement actions to manage our business as efficiently as possible,” a Bed Bath & Beyond spokesperson said in an email Thursday. “As is our practice, we do not comment on speculation. We will update all stakeholders on our plans as they develop and finalize.”

Bed Bath & Beyond stock has become popular with “meme” traders and short sellers, who have been betting on opposite sides of the trade as the retailer reported a poor holiday season and plans to shut down stores. Shares have traded as high as $30.06 and as low as $1.27 in the past 12 months, while declining 81.8% overall in that time. The S&P 500 index
SPX,
+1.10%
has declined 7.7% in the past 12 months.

See also: Why naked short selling has suddenly become a hot topic

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January 26, 2023
Bed Bath & Beyond gets Nasdaq delisting warning, stock tumbles 7%

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Bed Bath & Beyond Inc. has received a warning that it is not in compliance for continued Nasdaq listing because the company has not yet filed its Form 10-Q quarterly report with the Securities and Exchange Commission.

In an SEC filing Thursday, the troubled home-goods retailer said it had received the Nasdaq notice on Jan. 12. The notice has no immediate effect on the listing or trading of Bed Bath & Beyond’s
BBBY,
-4.09%
common stock on the Nasdaq
COMP,
+0.86%,
the filing said. “The Notice states that the Company has 60 calendar days from the date of the Notice, or March 13, 2023, to submit a plan to regain compliance with the Listing Rule,” Bed Bath & Beyond said in the filing.

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January 20, 2023
Why did Elon Musk just spend billions to take over Twitter?

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Elon Musk has taken over Twitter and fired its CEO and other top executives. Trading in company shares was suspended Friday on the New York Stock Exchange and the stock will be officially delisted early next month, according to a filing with securities regulators. So now what?

WHY DID MUSK BUY TWITTER?

One reason why Musk bought Twitter this week is because he had little choice. The world’s richest man spent months trying to back out of the $44 billion purchase agreement he originally signed in April. But the uncertainty was so disruptive to Twitter’s business that it sued him in the Delaware Court of Chancery to force the deal’s completion, and a judge gave a Friday deadline to complete the deal or face a November trial that Musk was likely to lose.

As for why Musk wanted to own Twitter in the first place, the reasons are more complicated. “There has been much speculation about why I bought Twitter and what I think about advertising,” he said in an open letter Thursday to companies that sell ads on Twitter, which is how the company makes money. “Most of it has been wrong.”

HOW DID MUSK BUY TWITTER?

It’s not yet clear how Musk secured all of the financing to close his $44 billion agreement to buy the company and take it private. But many of the commitments to the Tesla CEO were pledged back in the spring.

A group of banks, including Morgan Stanley and Bank of America, signed on earlier this year to loan $12.5 billion that Musk needed to buy Twitter and take it private. Solid contracts with Musk bound the banks to the financing, although changes in the economy and debt markets since April have likely made the terms less attractive.

Investors who would get ownership stakes in Twitter were also expected to chip in billions. Musk’s original slate of equity partners included an array of parties ranging from the billionaire’s tech world friends with like-minded ideas about Twitter’s future, such as Oracle co-founder Larry Ellison, to funds controlled by Middle Eastern royalty.

Billionaire Saudi Prince Alwaleed bin Talal said Friday that he and his Kingdom Holding Company rolled over a combined $1.89 billion in existing Twitter shares, making them the company’s largest shareholder after Musk. Another equity investor, the cryptocurrency exchange Binance, confirmed Friday that it put in $500 million.

The more equity investors kicked in for the deal, the less Musk would have had to pay on his own. Most of Musk’s wealth is tied up in shares of his electric car company. Since April, he has sold more than $15 billion worth of Tesla stock, presumably to pay his share.

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October 29, 2022
Why did Elon Musk just spend billions to take over Twitter?

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Elon Musk has taken over Twitter and fired its CEO and other top executives. Trading in company shares was suspended Friday on the New York Stock Exchange and the stock will be officially delisted early next month, according to a filing with securities regulators. So now what?

WHY DID MUSK BUY TWITTER?

One reason why Musk bought Twitter this week is because he had little choice. The world’s richest man spent months trying to back out of the $44 billion purchase agreement he originally signed in April. But the uncertainty was so disruptive to Twitter’s business that it sued him in the Delaware Court of Chancery to force the deal’s completion, and a judge gave a Friday deadline to complete the deal or face a November trial that Musk was likely to lose.

As for why Musk wanted to own Twitter in the first place, the reasons are more complicated. “There has been much speculation about why I bought Twitter and what I think about advertising,” he said in an open letter Thursday to companies that sell ads on Twitter, which is how the company makes money. “Most of it has been wrong.”

HOW DID MUSK BUY TWITTER?

It’s not yet clear how Musk secured all of the financing to close his $44 billion agreement to buy the company and take it private. But many of the commitments to the Tesla CEO were pledged back in the spring.

A group of banks, including Morgan Stanley and Bank of America, signed on earlier this year to loan $12.5 billion that Musk needed to buy Twitter and take it private. Solid contracts with Musk bound the banks to the financing, although changes in the economy and debt markets since April have likely made the terms less attractive.

Investors who would get ownership stakes in Twitter were also expected to chip in billions. Musk’s original slate of equity partners included an array of parties ranging from the billionaire’s tech world friends with like-minded ideas about Twitter’s future, such as Oracle co-founder Larry Ellison, to funds controlled by Middle Eastern royalty.

Billionaire Saudi Prince Alwaleed bin Talal said Friday that he and his Kingdom Holding Company rolled over a combined $1.89 billion in existing Twitter shares, making them the company’s largest shareholder after Musk. Another equity investor, the cryptocurrency exchange Binance, confirmed Friday that it put in $500 million.

The more equity investors kicked in for the deal, the less Musk would have had to pay on his own. Most of Musk’s wealth is tied up in shares of his electric car company. Since April, he has sold more than $15 billion worth of Tesla stock, presumably to pay his share.

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October 28, 2022