Yep... this junk was already effectively a penny stock at 35 cents -- down 93% over a year. Likely to be worthless after a full debt re-org flushes out which allows a majority of the stores to remain open. So the question remains - what is the short term trade here? The re-organization is agreed upon and structured -- so there will unlikely be any surprises. Is this a set-up for a short-term bounce for PRTY which is tradable. What is the risk versus potential reward. America’s largest party supply store files for bankruptcy https://www.cnn.com/2023/01/18/business/party-city-bankruptcy/index.html Party City filed for bankruptcy protection Tuesday, weighed down by competition and years of financial losses. The largest party goods and Halloween specialty retail chain in the United States said in a regulatory filing that it reached an agreement with debtholders to cut its $1.7 billion debt load. The company said it secured $150 million in financing that will allow it keep its stores open and operations running. As of October, the Company had 761 total Party City (PRTY) stores and 149 temporary Halloween City stores. In 2021, Party City (PRTY) had more than 16,000 full- and part-time employees. Party City has for years battled competition for party goods and decorations, especially from big-box chains and online retailers that sell a wider variety of merchandise. Target in particular has increased its party supplies and special events merchandise, said Neil Saunders, an analyst at GlobalData Retail. “This is squarely aimed at the family demographic which traditionally shopped Party City,” he said. The emergence of Spirit Halloween, a pop-up store model, also cut into Party City’s sales during the key Halloween season. Competition is not the only factor that led to Party City’s collapse, however. The company had to contend with rising costs during the pandemic and a helium shortage, which hurt its highly-crucial balloon business. Balloons are a “focal point of our growth strategy and are a key driver of our differentiated brand experience,” the company said in a regulatory filing. Between 2017 and 2021, Party City’s sales dropped 8% to $2.2 billion. The company projected sales to remain flat in 2022. The company also lost money every year between 2019 and 2021 and said was on track to lose up to $199 million in 2022. Party City in December said it was at risk of a de-listing from the New York Stock Exchange because its stock fell under an average of $1 a share for 30 trading days. Party City’s bankruptcy may be a sign of trouble for the retail industry this year. Retailers had a weak holiday stretch, December retail sales showed, and that could force some companies to close stores or file for bankruptcy. Other struggling chains are at heightened risk of bankruptcy as consumer spending softens. Bed Bath & Beyond (BBBY) this month issued a grim message about its future, warning that a bankruptcy filing is a possible outcome for the company. There is “substantial doubt about the company’s ability to continue” because of its worsening financial situation.
I went to Party City the day before Halloween and the checkout lane had so many people lined up that it went all the way to the back of the store. They had five registers in total but only one or two had employees standing behind them. I couldn't help but think, "Who would run a store on the busiest day of the year with a bare minimum level of staff?" Needless to say, when I finally got out of there, I kept thinking, "I'll never come to this place again."
I seriously doubt that they were intentionally only using a few check out lines. Many businesses cannot find enough employees to operate their store normal business hours. Several stores where I live have adjusted their hours to fit the number of employees they have working a full week of hours. If they work their current employees excessively then they will lose them.
Unless PRTY is delisted, people will continue to trade it, it might still have some juice. Penny stocks are anything under $5.00 so there's no shame in that, lots of money to be made with them. I would trade it if I thought I could make some money with it. If not, there's a gazillion other stocks.
Although that may be true, the customer experience is the customer experience. And the average parent who's waiting in line for an hour just to buy a Cinderella costume for their daughter doesn't really have much sympathy for the billion-dollar company's inability to attract employees on the one day those employees are needed most.
Your definition of penny stock is not written in stone:" "What defines a penny stock? The exact definition of a penny stock varies, but typically they include stocks trading for less than $5 per share all the way down to even fractions of a penny. But usually when people say penny stocks, they're talking about those that trade for less than a dollar."