What Is Bagel Land?
"Bagel land" is a shoptalk term that alludes to a stock or other type of security that is moving toward zero ($0.00) in price. The name is derived from the way that the $0.00 price tag looks like the round state of the center of a bagel.
This term is normally saved for assets that used to have a higher valuation, rather than a penny stock or security that has a history of being sold economically.
Understanding Bagel Land
"Bagel land" is a casual term for a generally significant stock that is drawing closer a $0 price tag, normally because of business issues. For instance, assume a stock was trading at $10 per share when you purchased it. Notwithstanding, due to adverse earnings and poor business conditions, its price dropped to $0.30 in the six months after you made the purchase. You could allude to this stock as having "gone to bagel land".
Assuming an asset is drawing nearer $0, investors generally feel that the security is worthless. As a rule, a company might be approaching bankruptcy or facing major solvency issues. While getting back from supposed "bagel land" is conceivable, the probability that equity investors will lose their stake in the company is all extremely high.
A bagel land stock is ordinarily not accessible for purchase through normal channels and may start trading somewhere else. This is on the grounds that a stock that is drawing nearer a $0.00 price might have dipped under a certain price threshold that makes it eligible for trading on an exchange. For instance, the New York Stock Exchange (NYSE) has a $4.00 least trading price requirement for stocks. When a stock declines below that threshold, it can't be purchased through direct channels on the exchange.
Illustration of Bagel Land
Paragon Offshore Limited was a provider of offshore drilling rigs. The company's earnings were therefore closely tied to the wellbeing of the oil industry. At the point when oil prices have revitalized, Paragon's stock price had likewise risen. Be that as it may, the stock has likewise experienced defeats simultaneously with droops in the oil industry. In 2011, Paragon's stock was trading at $56.41.
During this period, the Brent Crude oil benchmark crossed $100 per barrel price interestingly. At the point when the price of oil then plunged in 2016, Paragon's business experienced thusly. It was forced to file for bankruptcy in 2016. Its stock price, which had been cratering, headed into bagel land soon a while later.
Shares of Paragon were in this manner delisted and just traded on OTC Markets for just $0.69. After Paragon rebuilt its business, it was acquired by Borr Drilling Limited (BDRILL) for $2.3 billion in February 2018.
- A bagel land stock is ordinarily not accessible for purchase through normal channels and may start trading somewhere else like on over-the-counter (OTC) scenes.
- Normally saved for assets that used to have a higher valuation, Bagel Land isn't frequently used to allude to penny stocks or other securities that have long traded for low valuations.
- "Bagel land" is shoptalk for a security whose price has all the earmarks of being moving toward zero.