Before RadioShack Corp. (NYSE: RSH) reported earnings Tuesday morning, the company’s market cap was about $150 million. After the earnings debacle and some nasty comments from analysts, the firm’s market cap just before noon on Thursday had dropped to about $116.5 million.
When RadioShack’s market cap drops below $100 million, it will officially become a penny stock because the company has just over 100 million shares outstanding. The way the shares are plummeting — down 22% since Monday night — we might not have too long to wait.
On Wednesday, Scott Tilghman, an analyst at B. Riley, declared the stock worthless, putting a price target of $0 on the shares. The company is burning cash and has little in the way of assets to stage a comeback. The B. Riley analyst told MarketWatch that the company’s lack of capital and its “need to move quickly without fully vetting decisions means turnaround hopes seem to rest on crossed fingers rather than hard data.”
Raymond James analyst Dan Wewer piled on Thursday morning, saying the firm is “increasingly concerned” about the company’s prospects. His assessment is less conclusive than Tilghman’s, with a Hold rating, although he expects the full fiscal year 2014 to reach a stupefying loss of $4.05 per share. And if RadioShack lasts until 2015, Wewer expects the loss to narrow to a mere $3.66 a share.
With about $62 million in cash and a credit line of around $328 million, RadioShack cannot absorb consensus quarterly losses for the next two quarters of $0.58 and $0.76 per share. The longer creditors wait, the less likely it is that they will get even pennies back on the dollars they have plunked down for RadioShack.
RadioShack shares traded at $1.17 in the noon hour on Thursday. The stock’s 52-week range is $1.12 to $4.36.
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