Why RadioShack Corporation Stock Got Thumped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of RadioShack were giving investors shocks again today, falling as much as 11% and closing down 10% on a sell-off as the electronics retailer's shares dropped under $1 for the first time.

So what: Today's sell-off seemed to come from no greater reason than that the stock dropped below the dollar mark for the first time ever, hitting a new all-time low and crossing a key point, as stocks worth less than $1 are often seen as unviable. RadioShack shares have fallen 40% since the company reported earnings on June 10, posting a double-digit same-store sales decrease and again missing estimates by a wide margin.

Now what: Concerns about liquidity have begun to swirl, and the stock has also been rocked by analysts since the earnings report, many of whom have downgraded it to a sell, and one even gave it a price target of $0. RadioShack has promised to close stores but can shutter only up to 200 without declaring bankruptcy, according to creditor agreements. With electronics retailers struggling in general and the company facing mounting losses and a cash crunch with just $61 million in the bank, it seems more and more likely that the stock will head to $0. CEO Joseph Magnacca has tried to put a positive spin on things, but the challenges seem insurmountable at this point.

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The article Why RadioShack Corporation Stock Got Thumped originally appeared on Fool.com.

Jeremy Bowman and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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