What happens to GM stock purchased AFTER the bankruptcy filing?
My idiot neighbor apparently invested a large chunk of change on GM stock on Tuesday – the day AFTER the bankruptcy filing. What will happen to that stock? Does it become, in essence, a “penny” stock, a turn-around quick-trade not-really-connected-to the-company-at-all thing? Or is he secretly brilliant and will shortly double his cash? Does anyone know?
It doesn’t matter whether he bought it before or after the bankruptcy filing — he will loose all of his money if he doesn’t sell before the new GM emerges from bankruptcy. The old GM stock is currently trading over the counter — “Penny Stocks.”
He clearly doesn’t understand Wall Street. As I have been saying here over and over again (along with others)…there are no secrets here. WS has run the numbers and everyone agrees: the stockholders will get nothing when the new company emerges from reorganization — 90-180 days from now, in theory.
In the meantime his penny stock will bounce around heading toward $0.00, trading among fools who think they are gambling on a long shot when it is, in fact, a done deal.
The faster the fools figure this out — the faster it will fall closer to zero.
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