There’s simply too much debt, and not enough real estate.Īs such, investors should stop speculating on JCP stock now. In that scenario, creditors will reclaim some of their money. The most likely path forward is that JCP sells all of its real estate to Amazon (NASDAQ: AMZN), who leverages that real estate to establish a physical store presence across the U.S. The retail world simply does not need another undifferentiated department store right now. Now that the company is in the retail graveyard, it will stay there. Penney is headed for the retail graveyard. I’ve been saying for the past several years that J.C. And the JCP stock price will reflect this reality at some point. In other words, JCP stock truly is worthless. Penney falls well short of having enough assets to completely liquidate, pay off all its debt, and still have money leftover for shareholders. There’s $3.7 billion worth of debt on the balance sheet. At best, you’re talking about a company with maybe $2 billion worth of assets in a complete liquidation. Estimates for the value of that real estate range from $500 million to $1.4 billion. Penney has enough value in its real estate to sell all that real estate, pay off creditors and still have some money left over for common shareholders. To that end, the best way to play the greater fool game, is to never play it all. You never know if you are going to be the last buyer.
The problem with playing this game is that you never know when the game is going to end. At the end, the greatest fool will be holding a bag of JCP shares that, ultimately, are worthless. Until this game of the greater fool ends. JCP stock is caught up in this speculation.Īfter seeing what happened with HTZ stock, traders are piling into JCP stock on the hopes that other traders will follow suit. Look no further than Hertz (NYSE: HTZ), who was on the verge of bankruptcy but had enough of a spike in its stock price that the company is now planning on issuing shares to help pay off creditors.
There’s a lot of speculation going on in markets right now. For common shareholders, this thing is worthless. So do yourself a favor and stop speculating with JCP stock. Penney’s real estate is worth enough to pay off creditors and still have some money left over for common shareholders. They are either: 1) playing a dangerous game of “The Greater Fool” wherein traders are just buying JCP stock on the idea that someone else will buy it from them at a higher price in the future, and/or 2) betting on the idea that J.C. In essence, traders appear to be doing one of two things. Unchecked, and largely unwarranted, speculation. The pandemic year of 2020 came as more than as surprise for investors, as the broad indexes cratered in March, only to come roaring back to life after unprecedented stimulus from the federal government and the Federal Reserve helped drive a massive amount of cash into stocks, even as the economy was reeling.