What Is Bagel Land?
Bagel land is a shoptalk term that refers to a stock or other type of security that’s approaching zero($0.00) in price. The name is deduced from the fact that the$0.00 price label resembles the round shape of the center of a bagel.
This term is generally reserved for means that used to have a advanced valuation, as opposed to a penny stock or security that has a history of being vended veritably cheaply.
Understanding Bagel Land
” Bagel land” is a colloquial term for a historically precious stock that’s approaching a$ 0 price label, generally as a result of business issues. For illustration, suppose a stock was trading at$ 10 per share when you bought it. still, due to adverse earnings and poor business conditions, its price dropped to$0.30 in the six months after you made the purchase. You could relate to this stock as having” gone to bagel land”.
Investors generally feel that the security is empty, If an asset is approaching$ 0. In numerous cases, a company may be nearing ruin or facing major solvency issues. While returning from so- called” bagel land” is possible, the liability that equity investors will lose all of their stake in the company is veritably high.
A bagel land stock is generally not available for purchase through regular channels and may begin trading away. This is because a stock that’s approaching a$0.00 price may have dropped below a certain price threshold that makes it eligible for trading on an exchange. For illustration, the New York Stock Exchange( NYSE) has a$4.00 minimal trading price demand for stocks. Once a stock declines below that threshold, it can not be bought through direct channels on the exchange.
Example of Bagel Land
Paragon Offshore Limited was a provider of coastal drilling equipages. The company’s earnings were thus nearly tied to the health of the oil painting assiduity. When oil painting prices have rallied, Paragon’s stock price had also risen. But the stock has also endured downfalls coincidently with recessions in the oil painting assiduity. In 2011, Paragon’s stock was trading at$56.41.
During this period, the Brent Crude oil painting standard crossed$ 100 per barrel price for the first time.
When the price of oil painting also declined in 2016, Paragon’s business suffered in turn. It was forced to file for ruin in 2016. Its stock price, which had been cratering, headed into bagel land soon subsequently.
Shares of Paragon were latterly excluded and only traded on OTC Markets for as little as$0.69. After Paragon restructured its business, it was acquired by Borr Drilling Limited( BDRILL) for$2.3 billion in February 2018.