Sears Holdings (SHLD) Stock: Falling Hard On Bankruptcy Fears


Sears Holdings Corp (NASDAQ: SHLD)

Sears Holdings Corp is having an incredibly rough time in the market this morning, as fears of bankruptcy are causing an investor sales frenzy. Early this morning, our partners at Trade Ideas alerted us to large declines on the stock. At the moment (8:15), SHLD is trading at $7.80 per share after a loss of $1.30 per share (14.29%) thus far today.

SHLD May Be Filing Bankruptcy

The big issue that is driving Sears Holdings (the parent company of Sears and K-Mart) downward is the fact that the company publicly said that it has fears of going bankrupt. In fact, in a recent filing, the following quote came in loud and clear to investors:

substantial doubt exists related to the Company’s ability to continue as a going concern.”

At the end of the day, SHLD publicly said that it was in fear of going bankrupt, and that’s going to concern investors. This is exactly why the stock is taking a dive in the pre-market this morning.

Why Is Bankruptcy A Concern?

Ultimately, SHLD explained that the reason it doubts its ability to continue in operations is based on years of losses as sales continue to decline. Considering current factors, the company fears that it will not be able to pick sales back up, nor raise more money from the public. Unfortunately, lenders have decided to stop loaning the company money. In particular, Edward Lampert, the largest shareholder, CEO, and hedge-fund manager, said that he would stop loaning the company money as well. With an inability to raise funds and an inability to increase sales, the company may be destined for bankruptcy.

What We’ll Be Watching For Ahead

Moving forward, the CNA Finance team will be keeping a close eye on SHLD. In particular, we’re interested in following the company’s next moves and hoping that they will be able to increase sales. However, as things sit, bankruptcy is on the table, and considering the statements made, it’s the most probable outcome. Nonetheless, we’ll continue to follow the story closely and bring you the news as it breaks!

What Do You Think?

Where do you think SHLD is headed moving forward? Join the discussion in the comments below!

Update 12:34: Sears Holdings CEO says the company is still focused on long-term profitability in light of recent bankruptcy concerns.

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[Image Courtesy of Wikimedia]


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