J C Penney Stock Tumbles Amid Mounting Bankruptcy Fears

A debtor-in-possession loan up to $1 billion is being talked about

Deputy Editor
Apr 24, 2020 at 2:25 PM
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The plight of J C Penney Company Inc (NYSE:JCP) continues; as of today the department store chain name is in advanced talks for bankruptcy funds. According to a Wall Street Journal report, the retailer is seeking a debtor-in-possession loan from big banks somewhere in the ballpark of $800 million to $1 billion so the company can remain operating at some capacity. JCP was last seen trading down 7% at $0.24.

Just a chip shot off its April 15 all-time-low of $0.20, JCP has been guided to penny stock territory by its 20-day moving average, a trendline the equity has closed above only twice since January 10. That brings the shares' deficit up to 78.3% year-to-date.

All of this has left analysts understandably pessimistic. All nine in coverage sport a “hold” or worse rating. And while the equity’s 12-month consensus target price of $0.65 is a staggering 167.8% premium to its current levels, it still pales in comparison to JCP's April 30 annual high of $1.37.

In the options pits, however, traders could be betting on some sort of short-term bounce with calls. At last check, over 7,700 calls have been ordered up, double the intraday volume and two times the number of puts changing hands. That's volume good for the 94th percentile of its annual range.


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