Reply To: COVID 19 crisis -What happens when share price of company goes down to Zero

#111897

Jubran Alshahrani
Participant

Hi,

The market reflects the value of the company so if goes to zero it should mean this company would go out of business. Most likely this says that one the company will not breakeven, two the company’s revenue an future revenue cannot surpass the current cost structure and liabilities.

going forward i is important to look at three items:
1. the short term liabilities and the current working capital. This will give an idication of how will the company can opperate with current liabilities like inventory.
2. Long term liabilities can have a devastating impact on companies sin crisis if it expects to default ob some of them. In the real estate industry a lot of projects are leveraged so it can pile up on a company make it hard for it to pay off if revenue is down.
3. Revenue sustainability: what revenue streams are reliable during the crisis and what will pick up. This will be important to show how to reschedule payments on some liabilities.

The company will most likely have to restructure an that is not the end of the world and it can still be a great company.

Wish you the best
Jubran

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