Delta Airlines stock last six days - why??????

Question

Delta dalrq.pk has been trading at 5 to 10 times the normal volume and doubled in price over the last week. I thought this stock becomes worthless as they exit bankruptcy. Same volume increase on bankrupt Northwest nwacq.pk. I own 5k shares of each and fiqured on writing it off. Someone know something I don't?

Answer 1

Until it exits from bankruptcy it can still trade. People still trade on it, but it's mainly gambling, because of what you said (it being worthless when it comes out). Until then, it's basically a penny stock and for some reason, like mosquitoes to the bug zapper, investors seem to like to trade paper. Samething happened on UAL before they exited.

All I can say is last one holding the bag, loses it all!

You'd do better sticking to other solvent companies like CAL, AMR, JBLU for your risks, though, it's still a very volatile industry. And can still go down. But oil prices is helping a bit.


(Oh, and no, they don't know something that you don't)

Answer 2

In theory, when a firm defaults, the debtholders should get the firm, and the equity holders get nothing unless the debtholders are paid off in full.

Reality and theory rarely meet. Since the old shareholders can hold up the transfer of power while in bankruptcy, the debtholders have an incentive to negotiate. What usually happens is that debtholders take a large equity position and a smaller debt position in the restructured firm -- and let the old shareholders keep a small equity position in the new firm.

News that Delta is nearing the end of bankruptcy and coming to an agreement on the restructuring is good news for all involved. The increase in price and volume reflects this good news.

Answer 3

Many market factors influence the price of a stock. There are "market makers" who must try to influence markets to their benefit while staying within the law. There are institutions that must answer monthly to their customers. And there are short and long options players as well as long holders. Also there is public opinion, the number of shares outstanding,etc.

Answer 4

Just because its bankrupt, doesn't mean its worthless, esp. since its in reorg. rather than liquidation. Airlines tend to trade better as oil gets cheaper and oil has been getting hit pretty hard of late.
the 12mm share day on Friday was likely related to options expiration.

Answer 5

At a minimum, fuel prices have dropped dramatically, which is fueling all of the airlines stock (pun intended).

Also, they hired Ken Khorey, who did a great job at Weyerhauser, getting them out of bankruptcy.