Тop-4 Impressive Leaps on the Global Markets in 2020
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Don’t worry, it’s not a “year in review” yet but we’re getting pretty close to it. Today, we’ll try to carry you away with the list of the most dramatic ups and downs in quotes of 2020. Enough with the prelude – let’s get to the point!
WTI
The “black gold” market is still terrified when remembering April 2020: on April 20th, the price dropped to the bottom at -$37.63 per barrel, thus losing 305.97%. Just in case: it was neither hyphen nor en dash, it was a minus sign.
Due to the spread of the coronavirus, quarantine restrictions were introduced almost everywhere in the world. Borders were closed, the transport sector froze – the demand for the oil plummeted quickly and frighteningly, while the daily output was just about to go up: on April 1st, the OPEC+ agreement, which prevented the largest oil-producing countries from increasing the production, fell apart.
Under such conditions, oil reservoirs were filled very quickly. Early in April, a major hub for WTI in Cushing, Oklahoma, was 72% filled. This was probably the case when an optimist would say 28% empty instead of 72% full.
The expiration date of the May futures was quite close, the “black gold” was needed by no one and didn’t have any extra place to be stored, that’s why investors started selling it in a big way, thus collapsing the market by more than 300%.
Chesapeake Energy
Hard times for Chesapeake Energy started this spring. The energy prices plunged, shale oil production became subeconomic, the company’s debt reached $9.16 billion, while losses for the first quarter exceeded $8 billion, which is by 400 times more in comparison with the same period of 2019.
In November, Chesapeake Energy shares cost less than $1, thus making the circulation of shares at the NYSE impossible and almost forcing delisting. To avoid this, the company’s management decided to make a reverse stock split 200 to 1 but this move barely improved the situation.
On April 12th, the OPEC+ had a new agreement, according to which, oil-producing countries had to cut the daily output starting from May 1st. This agreement brought hope for a soon recovery of the sector and drove up the demand for shares of undervalued companies of the segment.
Speculators, who had been increasing their short positions for a long time, didn’t expect shares to grow and had to buy them at any available price. As a result, on June 89th, Chesapeake Energy shares skyrocketed by 181.94% and reached $69.92 per share.
However, it was a one-day leap, which, perhaps, was, the final good news for the company. In late June, it filed for bankruptcy and got a delisting memo from the NYSE.
Biogen
For many years, an American biotechnological company called Biogen has been developing Aducanumab, a medication to fight Alzheimer's disease. At long last, in August 2020 the firm put a request for approval from the US Food and Drug Administration (FDA).
On November 4th, the regulator announced that it had received enough information from the pharmaceutical company and was assessing the possibility of approval of Aducanumab as high. The market was positive in its response to this news: Biogen shares went up by 44%, from $247.01 to $355.63 per share.
However, in just several days, the FDA panelists said that they hadn’t found compelling evidence of the effectiveness of the new medication against Alzheimer's disease. And the next thing you know is that shares plummeted by 36%.
At present, the FDA is still considering the request and the company stands good chances to get approval. Moreover, Biogen put similar requests to corresponding regulators from Europe and Asia.
Eastman Kodak
On July 28th, we heard the news that the US International Development Finance Corporation (DFC) would distribute a $765 million loan to a former photography equipment manufacturer. A pretty unexpected twist, shall we say.
Since the time it was the leader in the analog photography market, Eastman Kodak had a sound base for chemical production. Under the terms of the deal, the company had to use these facilities to produce ingredients for medications. As expected at the DFC, the production output might be as much as 25% of all components required by the country.
On July 28th, Eastman Kodak shares skyrocketed by 203.05 %, from $2.62 to $7.94 per share. The next day, this crazy leap continued, by 318.14 % up to $33.2.
However, as early as in August, the United States Securities and Exchange Commission (SEC) got interested in one small nuance: the share price growth started one day before the loan was officially announced. The company was suspected of insider trading and its shares dropped 72% within a month.
The SEC couldn’t prove charges against Eastman Kodak, that’s why it started verifying the legality and validity of the DFC’s decision to distribute such a big a loan. On December 12th, it became known that this investigation also led nowhere and Kodak shares jumped by almost 60%.
However, the SEC was joined by Congress, which was also intrigued by the deal. The investigation continues, that’s why it’s rather difficult to predict whether Kodak will receive $765 million or not.
Summing up
Especially for you, we’ve made the list of the most impressive leaps on the global market in 2020 and tried to describe how extremely shaky were Chesapeake Energy, Biogen, and Eastman Kodak shares, as well as WTI prices. Needless to say, that the key reason for such volatility was the COVID-19 pandemic but it wasn’t the only one.
What other dramatic events that took place in financial markets in 2020 do you remember? Write in the comments!
