YRC Worldwide’s stock took a wild ride on Wall Street this week, almost tripling in value on Monday on sudden and unexplained trading before apparent short-selling sent shares falling back more than a third on Tuesday to $1.14 a share.
The troubled trucking giant’s shares soared inexplicably from 60 cents at the close of June 20 to hit $1.76 a share around mid-day June 27, closing at $1.60 that day.
Investors apparently were seeking huge, if short, gains in the troubled trucking company’s volatile stock, trading 19.2 million shares on Monday alone.
The sudden run-up in the stock price was even more puzzling as the company is planning a restructuring that would drastically diminish its per share value.
If YRC completes its financial restructuring by its July 22 deadline, current shareholders would be reduced to owning 2.5 percent of YRC’s stock.
Financial analysts estimate the stock’s value would fall below 5 cents a share, and the company would face the prospect of being delisted by Nasdaq.
YRC has reported improvements in its business lately. Although the company lost $102 million in the first quarter, YRC has gained freight volume in recent months.
But the most likely reason for the feeding frenzy around YRC’s stock is short-selling, in which traders essentially bet that a stock will decline.
Traders may try to ride YRC Worldwide’s stock up and down the NASDAQ exchange more than once before the restructuring deal is complete.
YRC Worldwide has lost more than $2.5 billion since 2006 and seen its total revenue drop from $9.9 billion in that year to $4.3 billion last year.