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Saturday, November 26, 2022

A Close Look at RadioShack Corporation (OTCMKTS:RSHCQ)

RadioShack Corporation (OTCMKTS:RSHCQ) continues to move higher on accelerating volume since reversing off $0.082 lows that the stock hit shortly after hitting the bb’s.

Speculators love to trade Q stocks with built in liquidity and major exposure for their ability to make spectacular gains once on the bb’s. It’s a risky game however as all signs point to RSHCQ being completely worthless at some point very soon.

RadioShack Corporation (OTCMKTS:RSHCQ) is the store we all went to as kids to buy batteries, radios, cameras and cable wire and other technology of the time. The Company has over 1,700 stores that it’s in the process of closing as well as 4,297 total locations that it’s going to have to make decisions on.

RadioShack was a leading national retailer of innovative technology products and services, as well as products related to personal and home technology and power supply needs. RadioShack offers consumers products and services from leading national brands, exclusive private brands and major wireless carriers, all within a comfortable and convenient shopping environment.

Today’s RadioShack is dedicated to reinvigorating stores, revamping product assortment and repositioning the brand. With a refined product mix, enhanced in-store experience and expert associates, the new RadioShack is the neighborhood technology resource, equipping consumers with the right product and know-how based on their needs. RadioShack continues to make significant strides in all five areas of our turnaround plan – most visibly through our new brand, updated stores and new product assortment.

In 2013, the company made improvements to nearly all U.S. company-owned stores. This includes more than 100 concept and brand statement stores, which feature bright, completely redesigned interiors and the new exterior signage featuring the company’s new look, incorporating interactive areas designed to help shoppers improve their technology profile.

In February the Company filed for Chapter 11 bankruptcy protection in Delaware. This comes after many years of deteriorating sales and a tanking stock price that has lost 99% of its value over the last 10 years.

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Radio Shack disclosed that it has reached an agreement with hedge fund Standard General for the firm to purchase up to 2,400 of its stores. In a statement, RadioShack said:

”RadioShack currently has approximately 4,000 company owned stores in the U.S. Its more than 1,000 dealer franchise stores in 25 countries, the stores operated by its Mexican subsidiary, and its Asia operations are not included in the Chapter 11 filing or the agreements announced today.

Discussions are underway with interested parties to sell all of the company’s remaining assets. These steps are the culmination of a thorough process intended to drive maximum value for our stakeholders” said RadioShack CEO Joe Magnacca.

The fact is that in most cases, even when a Company successfully exits Chapter 11, the old commons (in this case RSHCQ) are wiped out as the surviving Company creates a new capital structure.

Despite this fact RSHCQ continues to trade significant volume in recent weeks prompting RadioShack to issue a press release saying ”In light of the trading volume in its common stock at prices in excess of $0.20 per share, RadioShack Corporation today reiterated its belief that there will be no recovery for any equity holder in its pending Chapter 11 proceedings.

Equity holders of a company in Chapter 11 bankruptcy generally receive value only if all claims of a company’s secured and unsecured creditors are fully satisfied. RadioShack said it believes that the claims of its secured and unsecured creditors will not be fully satisfied, leading to the conclusion that RadioShack common stock has no value.”

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Currently trading at a $10.5 million market valuation RSHCQ is moving up the charts on accelerating volume in what looks like one big final dead cat bounce. Speculation continues that RadioShack might exit Chapter 11, but the chance of RadioShack exiting Chapter 11 with its commons intact is virtually nil; in the meantime the stock is trading over $300,000 a day in dollar volume and anything is liable to happen. We will be updating on RSHCQ when more details emerge so make sure you are subscribed to Microcapdaily so you know what’s going on with RSHCQ .

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Disclosure: we hold no position in RSHCQ either long or short and we have not been compensated for this article

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