by Wolf Richter, Wolf Street:
The massacre, stock by stock, all 1001 of them, listed right here.
The Everything Bubble, the greatest speculative bubble in history by most any metric, became the Everything Bust this past spring when the Wild Bull Stumbled Into a Hibernating Bear. Documenting the bust, Wolf Street began reporting on high-profile “Imploded Stocks” – case studies in speculative excess, subsequent revaluation and Creative Destruction.
TRUTH LIVES on at https://sgtreport.tv/
That raised broader questions for me. How many over-leveraged companies would be “caught offsides” as the Federal Reserve tightened sharply against persistent raging inflation? How many Imploded Stocks would there be? How full could the market’s “Bargain Basement” get?
To find out, I began tracking “every” stock. Among the US-traded tickers (as of May 13), there were 6281 (or so) common stocks, from A to ZYXI. The intent was to capture the full spectrum of actual companies traded on the major U.S. exchanges. So this list includes American Depositary Shares (ADR’s or ADS’s) of some non-US companies, but excludes Exchange-Traded Funds (ETFs), Warrants, Preferreds, unfulfilled SPACs, and other Wall Street exotica. It does include exchange-traded micro-caps, penny stocks, biotech startups, and other small but real companies.
I had a computer check the prices of all 6281 stocks every weekend. To qualify as “Imploded” here, the latest price had to be 80% or more below the stock’s “high” since the COVID crash bottom on 3/23/2020.
Among the 6281 stocks, how many would implode, and how soon? The first scan on May 23 found 866 Imploded Stocks. But 866 is a weird number.
I wanted to see 1000 – how long would it take? Things had already been moving swiftly, and so it continued at first – on June 18 the Imploded List had 910 stocks.
But then the summer rally began, and the list shrank a bit. The exchanges also delisted over 100 companies, and others rebranded with new names, or merged to survive. Creative Destruction is swift!
To keep things simple the original list was NOT refreshed with new IPOs or updated with name-changes, and delisted stocks were dropped. By July 23 the list was back down to 867, and by August 13, just 779.
But then the list grew again as the market turned down and the Implosions resumed, faster than Creative Destruction could clean up.
From September 24 into early October, the list hovered near 970. But this past week did some damage, and as of the October 14 close, the list is now up to 1001!
That’s right: Not counting delisted stocks, mergers or name-changes, nearly 1 in 6 US surviving stocks from May is now “on sale” at 80% off its high. How much more room is there in the Bargain Basement?
The complete Imploded Stocks list is below. Most are smaller companies you’ve never heard of. There are always far more micro- and small-cap stocks than household names, and there’s more turnover down there too.
The median “peak price” date was February 9, 2021, in line with Wolf’s “infamous February” comments, when the whole thing started coming apart. About 160 companies peaked in the week of Feb 8-12, and another 100 peaked the following week. So about 1/4 of the Imploded stocks hit their high point together.
Fewer than 100 of these peaked after July 2021. But then again it takes time to implode by 80%, so it’s likely that more stocks which peaked with the rest of the market last fall/winter will start to show up on the list.
(For Data Gurus: “Imploded” here isn’t quite the same as in Wolf’s method. The 80% threshold and definition of “high price” are different. Here we’re using “adjusted closing” prices, which is to say total-return data adjusted for share splits and dividends. The “high” price used here is the adjusted intraday high from the day of the highest adjusted closing price. A few shares may have traded at a slightly higher price on a different day with a lower closing price.)
No doubt we’ll see more articles from Wolf on the more well-known Implosions, and I may do more analysis of the full list, especially if it grows further. But for now, I just want to note that these 1001 companies collectively account for a decent share of the US economy and employment.
For these companies “caught offsides” by the Everything Bust, many workers and investors – and their families – must be deeply anxious about the falling share prices. These companies’ vendors may be worrying about getting paid, and their customers may be worrying about weak links in their supply chains. Foolish bubble-blowing bankers bear a heavy burden of responsibility for making so many people so worried. May justice be done. But I expect there’s more pain ahead first.
Of these 1001 Imploded Stocks, how many will fail and how many will survive the rest of the Everything Bust? How many survivors will become case studies in stock turnarounds? Time will tell, but I wish everyone the best of luck. With so much mess to clean up, I think we’re going to need all the luck we can find…