After hitting a fresh low two weeks ago at 43 cents per share, now-defunct trucking company Yellow (NASDAQ:YELL) has been on a turbulent ride. Shares of YELL stock have recovered to more than $4 per share in recent days before giving up most of those gains today. The company’s valuation has taken a hit of around 11% at the time of writing as investors digest a series of announcements.
Stepping back a second, Yellow officially filed for bankruptcy on Sunday, essentially laying off the entirety of its staff and ceasing operations. That’s generally not a good thing and is clearly the driving force behind the recent price action we’ve seen in this stock (which has dipped from a monthly high of around $4.25 last week to just $1.70 at the time of writing).
That said, there is some relatively decent news investors have to hang their hat on. Notably, Yellow has put together a proposal to the court that would provide $142.5 million in new cash to the company from private lender Apollo as part of the filing. As it turns out, the company appears to have a greater interest in its assets, with other financiers potentially stepping up to the plate. Thus, it was announced today that Yellow has extended its bankruptcy negotiations to next week.
Let’s dive into what this means for investors and what to make of this volatile stock.
YELL Stock Drops as Investors Debate Future of This Trucking Company
When Apollo stepped up with financing options to help save Yellow and potentially get the company back into operations, the market clearly cheered that move. While shareholders may be on the hook for something due to these bankruptcy proceedings (experts are calling into question the company’s ability to pay back its $700 million loan from the Treasury Department), a flurry of interest around bailing out this company could be a good thing over the medium-term, for investors betting on a full recovery coming out of this restructuring.
Notably, the proposed loan offers from other financiers appear to be much more lucrative than the ones offered by Apollo. Notably, Yellow has stated it intends to sell all of its assets in bankruptcy, but it is feasible the company could re-work its debt in a way that could allow for a potential comeback.
Now, it’s very clear that YELL stock is highly speculative, and this isn’t a company most investors should consider. It’s going under, and it is very unlikely to become the restructured better version of itself, so many think is possible. I’m of the view this will be an intriguing company to watch from here. But betting on where its stock price could be headed is far too dangerous for my blood.
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On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
