One more chance to exit?
PG&E Corporation (PCG) stock has risen more than 10% today. It soared from close to ~$5.0 to more than $8.0 in the last three trading sessions. This same week, the company disclosed its plans to file for bankruptcy, followed by many brokerage houses significantly trimming its stock price targets. Ratings agencies downgraded its debt.
Even though PG&E stock has shown a notable surge recently, it continues to look immensely risky. Its implied volatility, an indicator of investor anxiety, is close to ~170% this week against broader utilities’ (XLU) ~18% average. Short covering could be an important factor in the stock’s surge.
However, PG&E had already gone bankrupt in 2001. The stock rose more than 500% over the next six years.
RBC cut PCG’s price target from $45.0 to $8.0 today. UBS also cut its price target from $29.0 to $8.0 on January 17.
PG&E stock continues to see huge increases in its volumes. On January 17, more than ~205 million shares changed hands, versus its three-month average volume of ~20 million.
BlueMountain challenged PG&E’s bankruptcy
On January 17, PG&E shareholder BlueMountain Capital challenged its bankruptcy plans. BlueMountain said in a letter addressed to the PG&E board that PG&E is solvent and has ample liquidity to manage its operations while its liabilities remain uncertain and contestable.