A few weeks ago, we wrote about how Ambac Financial Group (ABK) had a liquidity problem and was in default on billions of dollars in debt. The stock, as expected, tanked – shooting down to penny stock levels.
Then, on April 8th, despite a delay in their 10-K filing and statement of earnings for 2009, Ambac came out with Q4 earnings of $1.93 per share, compared to a Wall Street consensus of -$3.34. The Street was stunned and just like that, ABK flew up overnight and has continued to climb, especially yesterday when it shot up over 100%.
But today, after shares soaring more than 40%, JP Morgan warned that, despite the killer Q4 earnings report, Ambac is still a dog with fleas and that their 10-K filing will support their belief the company has no equity value according to The Fly On The Wall. Thus Ambac began to decline as investor confidence was wiped out. The stock is now down 11% at the $2.00 range.
And even more killer is the amount of shares being traded in this stock. Ambac has 287.6 million shares floating on the market with an average volume of 34.5 million shares traded every day. Today alone, nearly 570 million shares of Ambac have been traded which is absolutely nuts. This is a liquid stock in the truest sense of the term. Investors will no doubt see volume taper off in coming days but the stock won’t calm down completely until Ambac puts out the ever-important 10-K.
Check out the chart below showing what’s happened over the past five days:
Photo: Google Finance
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