(POLL) Would You Invest In AMR (American Airlines) Stocks Now?

[txtmax4]

As we all know, American Airlines has filed for chapter 11, something which other major thriving airlines have gone through in the past as well.
AA's stock, AMR, has plummeted since the news about chapter 11 hit the fan.
In the past year AMR has traded as high as $8.89 and as low as $0.20 after the latest news.

Many experts say this may be the time to buy stocks, but others are wary.
What's your opinion on the matter?

[GMK]

Your question and poll are flawed. AMR stock will be worthless when they emerge from bankruptcy, and they will emerge just like the other major airlines have. You can still make money by buying the stock now as for instance it is up $.04 today which at such a low price is %7.81 gain which is not bad but that type of investing is to risky for the average investor.

[AJK]

Your question and poll are flawed. AMR stock will be worthless when they emerge from bankruptcy, and they will emerge just like the other major airlines have. You can still make money by buying the stock now as for instance it is up $.04 today which at such a low price is %7.81 gain which is not bad but that type of investing is to risky for the average investor.

You started off with a pretty unfounded assertion, and, to my mind, your following words didn't do much to "found it."

[moko]

i wouldn't  invest in any airline there all risky (unless i was a professional trader)
as a general rule it takes a lot more to understand airlines than other enterprises

[LAXtraveler]

I know someone who made a quick 30% profit last week when it went up. Bought one afternoon and sold the next morning.

[mercaz1]

You started off with a pretty unfounded assertion, and, to my mind, your following words didn't do much to "found it."

maybe you lost your mind and that is why you think he didnt find his assertion

[Mocha]

Your question and poll are flawed. AMR stock will be worthless when they emerge from bankruptcy.

+1
A new stock will be issued when they emerge from bankruptcy.

[Dan]

I guess I don't understand what causes the fluctuations in price if it will be worth nothing at all very soon.

[JEWDA]

I guess I don't understand what causes the fluctuations in price if it will be worth nothing at all very soon.

+1

[AJK]

maybe you lost your mind and that is why you think he didnt find his assertion

Excuse me?

A new stock will be issued when they emerge from bankruptcy.

Even if that were always true (which it isn't), that doesn't mean plenty of $$ can't be made in the interim.

I guess I don't understand what causes the fluctuations in price if it will be worth nothing at all very soon.

There is no guarantee it will be worth nothing soon or ever. There is a possibility that they can restructure in such a way that their equity holders get paid out and the stock (and company) are able to remain viable.

[Mocha]

I guess I don't understand what causes the fluctuations in price if it will be worth nothing at all very soon.

When a company goes bankrupt stock owners are of the last in line to collect their debt. So anyone buying a stock is betting on the unlikely event that the stock owners get a payout at the end of this bankruptcy. In most instances, the company's plan of reorganization will cancel the existing equity shares. This happens because secured and unsecured creditors are paid from the company's assets before common stockholders. And in situations where shareholders do participate in the plan, their payout is usually a fraction of the investment.

[GMK]

Read this article http://seekingalpha.com/article/311689-it-s-not-too-late-to-sell-amr

Buying AMR stock right now is strictly for experienced day traders. The stock will be worthless when they emerge from bankruptcy. This is almost guaranteed to be the outcome.

[AJK]

I'm still not sure how the question is flawed.

There is one piece of anecdotal evidence on this very thread showing the possibility to make large sums (or %) on your money.

Whether or not AMR comes out of bankruptcy in its current form, or trading under another ticker is (almost) entirely irrelevant.

[Dan]

When a company goes bankrupt stock owners are of the last in line to collect their debt. So anyone buying a stock is betting on the unlikely event that the stock owners get a payout at the end of this bankruptcy. In most instances, the company's plan of reorganization will cancel the existing equity shares. This happens because secured and unsecured creditors are paid from the company's assets before common stockholders. And in situations where shareholders do participate in the plan, their payout is usually a fraction of the investment.

Sure, but how many airlines in the last 100 years have gone bankrupt and not canceled out all previous equity owners?

[boruch]

Yes, you could make money with buying 'penny' stock but it's very risky. Remember that every trade cost you so that will eat into your profits. It's for day-traders, definitely not for the long term investor. But if you have a couple of hundred dollars (or thousands) to spare and you want to have some fun ...

The stock won't be worth anything when they emerge from bankruptcy. The reason for the stock-price movement is because of day-traders.

[boruch]

Sorry, I meant 'one of the reasons' instead of 'the reason'

[Deal Guy]

But why would Day traders or anyone for that matter invest in this stock now, if it will eventually hit zero? What causes it to go up tomorrow or the next day?

[Mocha]

Sure, but how many airlines in the last 100 years have gone bankrupt and not canceled out all previous equity owners?

Who says they didn't?

[Dan]

Who says they didn't?

If they all did (as I suspect) then what causes the fluctuations in price? Surely nobody would bet that this will be worth something if industry protocol is to make it worthless.

[Mocha]

If they all did (as I suspect) then what causes the fluctuations in price? Surely nobody would bet that this will be worth something if industry protocol is to make it worthless.

"If AMR stock is worthless then why is it trading at $0.38? One reason why AMR stock is not at 0 is because it was a very heavily shorted stock prior to the bankruptcy filing. Market participants who shorted AMR stock must buy the stock back to cover their shorts. This short covering game can go on for some time, but in the end the stock will go to 0. As an example of how stocks trade post bankruptcy, let's consider the old GM (GM) stock. After the bankruptcy, GM stock hovered between 20 cents and 80 cents for a period of many moths before ultimately becoming worthless."