Even as some analysts still believe Oklahoma City-based Chesapeake Energy is on a list of bankruptcy probables this year, stock in the company sky rocketed by nearly 182% in Monday’s trading. The company’s stock has jumped nearly 400% in two days of trading.
It was described as a very volatile session as Chesapeake Energy Corporation shares nearly tripled, going up $45.12 a share. That’s $45 a share and not the final value which was $69.92 a share at the end of the day’s trading session.
What’s behind it? Some believe it has to do with growing expectations of a quick rebound in the economy as well as an agreement among major oil producers to extend production cuts.
The oil and natural gas exploration and production company’s stock CHK, +181.93% shot up 181.9% to close at $69.92 on volume of 19.3 million shares, which was more than seven times the full-day average of 2.6 million shares according to Market Watch.
After rallying 76.5% on Friday, the stock has rocketed 397.7% in two days, and more than about eightfold since closing at a record low of $8.71 on May 14.
The stock’s rally Monday wasn’t a smooth one by any means, as investors had to endure 22 trading halts for volatility, with each halt lasting for five minutes.
Under the “limit up-limit down” rule approved by the Securities and Exchange Commission in 2012, stocks that are usually less liquid, such as those not in the S&P 500 index or the Russell 2000 index, like Chesapeake, will be halted for five minutes if it moves 10% or more from the average price over the preceding five-minute period.
For example, the first halt for volatility of Cheseapake’s stock was seconds after the at 9:30 a.m. Eastern opening bell, after the stock opened at $40.26 according to FactSet, or 62% above Friday’s closing price of $24.80.
Most of the halts were clustered around midday, when the stock took off to an intraday gain of as much as 212.5% before pulling back to a gain of just 95.4% a little before 1 p.m., before rallying again.
The company hasn’t responded to a request for information or comment on the stock’s volatile trading.
Source: Market Watch