Here is a potential explanation: The stock is priced for REORGANIZATION, not bankruptcy. If the company files for bankruptcy, the debt holders get paid off first. If the material value is not enough to pay off the debt, then the shareholders get nothing. Of course, this does not take into account "intangible assets" which would include the spectrum, which is said to valued at atleast 3.2 billion I believe it was. In total bankruptcy, this spectrum would be sold off (with the approval of the FCC), and then any left over funds would go back to the shareholder. This almost NEVER happens.Originally Posted by SiriusXMInvestor
HOWEVER: That would be in bankruptcy. If they reorganize, of couse they cannot sell off their satellites and the spectrum, because then they would be out of business. Thus, if they reorganize, the shareholders get left with JACK, the debt holders get repaid the some of what they were owed, and the company comes out with new shares and sells them for financing.
THAT is how the common stock and be priced lower than material value of a company. Look at the company bonds: They have always remained valuable and a good trade, while the common stock plummets.