It hasn’t been a good run for Endo International (NASDAQ:ENDP), and Tuesday isn’t making it any better. Shares of ENDP stock are down more than 40% today and almost 60% from last week’s high.
Surprisingly, though, shares are not making new 2022 lows. That won’t happen unless ENDP stock falls even further from Tuesday’s current low of 36 cents.
What’s triggering the recent selling pressure? Technically, it was the company’s earnings report. More specifically, management’s warning that a bankruptcy filing could be imminent is spooking investors.
On the surface, Endo International seems to have reported a solid second-quarter. A loss of 3 cents per share beat expectations by 11 cents, while revenue of about $569 million blew past estimates by $44.5 million. However, revenue still sank about 20% year-over-year, while Endo ended the quarter with $1.2 billion in unrestricted cash and $8.1 billion of debt. Worse, in the press release it reads:
“In light of the progress to date, the Company expects that these negotiations will likely result in a pre-arranged filing under Chapter 11 of the U.S. Bankruptcy Code by Endo International plc and substantially all of its subsidiaries, which could occur imminently.”
Will Bankruptcy Be Next for ENDP Stock?
The company allegedly helped fuel the opioid crisis and is now facing thousands of lawsuits as a result. While Endo denies these allegations, bankruptcy conversations are in full effect between the company and senior lenders. These conversations will most likely end with a Chapter 11 filing.
For its part, ENDP stock has been all over the map for the past few months. On June 28, shares erupted 114% at one point and closed higher by 85%. That move came after the Supreme Court overturned Roe v. Wade, and traders flooded into Endo International shares.
Trading volume hit 470 million in that single session alone, as investors speculated about the positive benefit to Endo. The company’s Par Pharmaceutical unit markets birth control pills, for what it’s worth. Then, shares cratered over the next two days after Endo missed an interest payment. A few days later, reports surfaced that the company was weighing filing for bankruptcy as it worked on a settlement for the opioid cases.
In short, this company is a mess right now and doesn’t have the financial flexibility it desperately needs.
On the date of publication, Bret Kenwell did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
