Stocks of bankrupt or near-bankrupt companies like car rental giant Hertz and Chesapeake Energy enjoyed epic rallies this week, even though equity holders will be the last in line to get paid when the firms finally go bust.
During an extremely volatile week, Hertz, which filed for bankruptcy protection at the end of last month, saw its shares rising over 500 percent compared to its low of $0.5 on May 26. Imminent bankruptcy filer Chesapeake Energy also enjoyed an insane rally, with its stock blasting from $14 last Friday to close at nearly $70 on Monday, and crashing to $19 by the end of the week.
Max and Stacy discussed the unusual stock market moves for companies that are about to collapse.
“If Chesapeake Energy declares bankruptcy or Hertz, for example – they also declared bankruptcy – the stock went up hundreds of percentage points, it’s a form of looting that’s going on,” Max Keiser said.
“And we see this looting on Main Street during Black Lives Matter [protests]… well, there is looting on Wall Street right now, there is looting on the Robin Hood app,” he said, referring to a mobile app for investing in stocks.
Max went on to say that users of the investment app are “either plowing into a dead loser – dead certainty of losing 100 percent of their money,” or just manipulating the price for quick gains.
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