Another meme stock has lost its spot on a major exchange. Yellow (OTCMKTS:YELLQ) began August on a high note when short squeeze momentum pushed it up more than 500%. However, as all short squeezes inevitably do, the momentum ended and reality has now set in. After Nasdaq suspended trading in YELL stock yesterday, the company began trading via an over-the-counter (OTC) exchange.
The new YELLQ stock isn’t adjusting well, down more than 25% as of this writing. But as it turns out, company insiders lost faith in Yellow long before yesterday’s trading halt. Since the company declared bankruptcy, top executives and board members alike have offloaded shares.
Who Sold YELL Stock?
Who offloaded shares of Yellow? Well, plenty of insiders. Indeed, an entire page of Form 4s filed with the U.S. Securities and Exchange Commission (SEC) on Aug. 16 reveals that many people reported offloading shares of YELL stock recently.
This list includes CEO Darren Hawkins, who registered two sales on Aug. 14 — disposing of his entire stake in the company of more than 330,000 shares. Chief Restructuring Officer Matthew Doheny also sold 298,139 shares on the same day. Meanwhile, President and Chief Operating Officer Darrel Harris sold 124,641 shares on Aug. 14 and an additional 12,195 on Aug. 15. Finally, also on Aug. 14, Executive Vice President, General Counsel and Secretary Leah Dawson offloaded 83,084 shares while director Douglas Carty sold 30,000 shares.
These insiders picked a good time to sell. Most of them offloaded shares while Yellow still traded around $1.50 per share. Now, YELLQ stock is hovering around 85 cents and its current trajectory suggests that it will fall even further. Of course, because the company has filed for Chapter 11 bankruptcy and laid off most of its staff, there’s little reason to suspect a recovery in the stock price.
Even the retail investor crowd seems to be losing interest in Yellow. While upvotes and mentions of YELL have risen across social media over the past 24 hours, ApeWisdom has not been able to calculate sentiment toward Yellow. That suggests that the retail crowd may be shifting its focus elsewhere.
Prior to the trading halt and delisting, InvestorPlace contributor Ian Bezek warned investors to sell YELL stock before it plunged even further:
“There is a long-shot theory that Yellow shares might have some terminal value thanks to the company’s fleet. It’s possible but seems unlikely. Companies rarely file bankruptcy unless their obligations significantly exceed their assets. It’s time to sell YELL stock now while there is still an active market; otherwise, investors risk losing everything they put into it.”
So, company insiders seem to have followed Bezek’s logic, offloading YELL stock before the delisting. Trading on an OTC exchange can hurt a stock’s credibility as well, compelling investors to either ignore or bet against shares. This will likely be the last nail in this troubled company’s coffin.
Why It Matters
Yellow is currently on a path that looks similar to that of Bed Bath & Beyond (OTCMKTS:BBBYQ). This fellow troubled meme stock declared bankruptcy in April 2023 and quickly delisted from the Nasdaq. Since then, it has wound down operations and closed stores while shares have trekked lower and lower. BBBYQ stock currently trades at 17 cents per share. That should provide investors with a good preview of where Yellow stock is headed.
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On the date of publication, Samuel O’Brient did not hold (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.
