When penny stocks delist from a major exchange, it spooks investors. Such is the case for Texas’s Sanchez Energy Corp. (OTC:SNEC). Now selling for $0.24 USD, can Sanchez stock make a comeback?
Penny Stocks to Watch
Normally, when writing about “Penny Stocks to Watch” you are highlighting something worth watching, i.e. something positive. However, “watching” what’s negative out there is equally important. Who wants to back a not-so-sure stock?
Unfortunately for Sanchez Energy, things really are quite unsure because, after a rough end to 2018, the company was delisted from the NYSE in February.
Delisting Penny Stocks
The troubled oil and gas company—once ranked as “the Eagle Ford Shale’s third most prolific driller”—has made the decision not to appeal the exchange’s decision.
This is unusual. Delisting is a sure sign of financial trouble and usually spells further disaster down the line. It’s hard to attract further investment when moving from a major exchange to the OTC Markets. With much less activity and much smaller volumes, companies delisting here are usually signing a death warrant.
CFO Cameron George confirmed as such by saying the delisting will “make it harder for the company to raise money, attract investors and obtain financing.”
To give up without a fight is telling; if the company isn’t trying to save these penny stocks, why should investors?
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Failed Deadlines
The company missed three vital deadlines, sealing its delisting fate. It first slipped below the $1-per-share mark in mid-November, then its market value fell below $50 million in January, and finally, the company failed to submit a plan to restore its stock price above the $1 mark in early February.
Soon after, it was removed from the NYSE.
Bankruptcy
This penny stock is now filing for bankruptcy in a hope to “explore strategic alternatives to strengthen its balance sheet and maximize the value of the company.” It has contracted advisory firm Moelis & Co. to help.
This is quite the decline for a company that produced more than 6.4 million barrels of crude oil and over 181.9 billion cubic feet of natural gas as recently as 2018. How the mighty do fall.
Do you take a punt on penny stocks that are this cheap? Or have the curtains closed on Sanchez Energy?
Featured Image: DepositPhotos © shanemaritch2
