Even though stock markets are notorious for their extended risk and volatility, incurring a loss is probably the last prospect investors consider when commencing trade with securities. The shareholders of Valence Technology, Inc. (OTC:VLNCQ) made no exception. Unfortunately, the company’s management has just dealt a huge blow to them – one they will never forget.
A couple of days ago, VLNC had been enjoying regular trading on the Nasdaq exchange with its stock price fluctuating around $0.65 per share. Surprisingly or not, it all came to an abrupt end on Jul. 12 when the company filed for bankruptcy under Chapter 11 of the U.S. Bankruptcy Code. This act brought about two immediate consequences.
First, VLNC’s market cap suffered a catastrophic failure as it shrunk by a staggering 75%, i.e from $110.5 million to $8.5 million, in less than 24 hrs. In plain language, this development meant that VLNC stockholders incurred dead losses in excess of $100 million in the twinkling of an eye, not holding any hope that they will ever bounce back.
Second, VLNCQ was automatically relegated to the OTCBB marketplace following the negative news. As of Jul. 16, 2012, you can buy VLNCQ shares at $0.05 or less, which barely equals 7% of its pre-Chapter 11 market value.
As it seems, VLNCQ has just gone under after 22 years of existence. The iceberg that sank the ship was a cumulative debt of $72.2 million.
