Death Knell Stocks


DEFINITION of 'Death Knell Stocks'

The shares of a publicly traded company that is on the verge of insolvency or bankruptcy. A death knell stock typically trades for less than $1. Death knell stocks are considered a very high risk investment. Sometimes companies can recover from such a poor financial position, but even if they do, they still may not be stable or be expected to last in the long run. Investors in death knell stocks may not earn a return on their investments and may even lose their principal.

BREAKING DOWN 'Death Knell Stocks'

Despite their low share price, death knell stocks should not be confused with penny stocks; the latter are typically micro-cap stocks that trade over the counter and have low volume. A historical example of a death knell stock is Lehman Brothers' stock, which collapsed in the blink of an eye in 2008 as the company went under.

  1. Lehman Brothers

    A firm that was once considered one of the major players in the ...
  2. Penny Stock

    A stock that trades at a relatively low price and market capitalization, ...
  3. Bankruptcy Risk

    The possibility that a company will be unable to meet its debt ...
  4. Bankruptcy

    A legal proceeding involving a person or business that is unable ...
  5. Insolvency

    When an individual or organization can no longer meet its financial ...
  6. Accelerated Resolution Program ...

    A program designed to reduce the time and cost of resolving failed ...
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  1. What are some alternatives a company can attempt prior to resorting to liquidation?

    Some alternatives a company's owners can attempt prior to resorting to liquidation are selling the company, raising money ... Read Full Answer >>
  2. Under what circumstances might a company decide to liquidate?

    There are many reasons a company may decide to liquidate. A smaller company may decide to liquidate if one of the main owners ... Read Full Answer >>
  3. What happens to the shares of a company that has been liquidated?

    The fate of a liquidating company’s shares depends on the type of liquidation the company is undergoing. The most common ... Read Full Answer >>
  4. What is the difference between compulsory and voluntary liquidation?

    Liquidation is the process where a firm's assets and liabilities are terminated, realized and subsequently distributed. In ... Read Full Answer >>
  5. What can cause a merger or acquisition deal to fail?

    When two large companies announce plans to merge, or when the larger of the two acquires the smaller entity, the surviving ... Read Full Answer >>
  6. What happens when a corporation declares bankruptcy?

    When a corporation faces severe financial challenges that cause its inability to repay debt obligations, filing for protection ... Read Full Answer >>

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