How come a stock traded under it's cash holding

Discussion in 'Trading' started by klin, Oct 1, 2001.

  1. klin


    Can anyone give me some possible reasons that a stock can be traded under its per share cash? COSN, traded at 0.37 with $2.11 cash per share, almost no debt. Isn't it worth at least $2?
  2. sallyboy

    sallyboy Guest

    Others may have a more authoritative response, but in the past I've heard that this may occur if investors feel that the company is in bad shape and may go bankrupt or at least burn through that cash as it continues operations. So in effect, the market is anticpating the cash not being there in the future.

    Hope that helps.
  3. Baron

    Baron ET Founder

    Cash on hand doesn't mean a whole lot when a company like COSN is spending 3 dollars for every one dollar it brings in. There are plenty of dot com stocks that are in the same situation.
  4. In addition to what Baron wrote:

    * burn rate, ie how long to go through all it's cash
    * how many customers, 1000s, 5 or none
    * backlog, do they have one
    * special situations: warrents, VC cash-out guarantees, VC interest etc.