BudLong,
maybe you take a look on ENML, Enamelon.
For quite a time the stock was trading over 4 (October 1998) and up to $10 in Dec 1998. It appears that the company was low of cash (given their foreseeable losses in the next quarters), so they decided to do a new round of financing. Note that they even have a product (the toothpaste).
That is:
Late Dec 1998, they did a convertible for only $5M, which is was roughly 7% of the market cap of the stock out. So it was relatively small - I estimated the consequences of the convertible not that damaging.
In December, the stock traded as high as $10 1/4, and the day of the closing it still stood over $8.
techstocks.com
What then happened is best described as a massacre. Regardless of the market conditions, or rare news releases, the stock kept on falling on a daily if not hourly basis.
Recently it hit $1, putting the market cap of ENML at only $10.9M (without counting in the effects of the conversion, however).
Depending on how much is left over from the convertible (in $$$ amount) the drag "could" continue to $0.5, $0.25 ... (so you do not know the floor, if any from which the stock price could emerge again). Indeed, there appears to be no floor for the stock price.
I am not aware of a stock performing worse than this one in the last half year, it lost 90%, (except some poor companies who filed for bankruptcy).
In the eventual case the nasdaq sent them a delisting letter given they fell under $1 for a longer time, they could reverse split - that has zero consequences for the convertible terms (except raising the ceiling price by a multiple).
Usually there is no way to tell when the selling happens, but it appears that it commences quite shortly after the closing and registration of the shares (which was January).
is.con |
