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Normally, bankruptcy is bad for stocks since it signals the end of the company’s operations, however, bankruptcy plays have been extremely popular lately with several stocks of companies declaring bankruptcy making impressive runs. One such company that may see a run in the near term is plant-based food producer Tattooed Chef, Inc (NASDAQ: TTCF) which is down nearly 50% since announcing its intention to file for bankruptcy. With the company yet to officially file for bankruptcy, TTCF stock may continue dropping until a delisting date is announced – following which the stock may witness a dead cat bounce.
TTCF Stock News
Filing For Bankruptcy
TTCF’s decision to file for Chapter 11 came after it determined that the $3.5 million it had on its balance sheet were not enough to meet its high quarterly cash burn rate as it burned $19.5 million on average each quarter in 2022. While TTCF reduced its operating expenses by almost 40% YoY, it still was not enough since it failed to raise capital. That said, TTCF is currently in the middle of finalizing the terms of its debtor agreement to fund its operations and meet existing customers’ demands during the bankruptcy process.
Dead Cat Bounce
While TTCF is yet to officially file for bankruptcy or start the delisting process from Nasdaq, TTCF stock may experience a dead cat bounce. Since bankruptcy plays are popular, TTCF stock may continue plummeting until a delisting date is set. However, the dead cat bounce could occur when the company nears its delisting date.
With this in mind, TTCF may experience a similar run to Bed Bath & Beyond (OTC: BBBYQ) and Cyxtera Technologies, Inc. (OTC: CYXTQ) following their Chapter 11 filing when both stocks ran 175% and 114% respectively. For this reason, TTCF stock could be an attractive opportunity for traders. However, it should be noted that the stock is extremely risky and could continue dropping to new all-time lows before a cat bounce could occur.
TTCF Stock Financials
In its Q1 2023 report, TTCF’s assets decreased 9% QoQ from $208 million to $190 million, and its cash and cash equivalents decreased by almost 39% QoQ from $5.7 million to $3.5 million. TTCF’s total liabilities slightly decreased by 0.9% QoQ from $120 million to $119 million.
Revenue also decreased 12% YoY from $67 million to $59 million. Operating costs decreased almost 40% from $23 million to $14 million, which contributed to a slight decrease in operating loss of 2% YoY from $19.2 million to $18.8 million. In this way, TTCF’s net loss declined 5.5% YoY to $19 million.
@stockballa believes that TTCF may double due to the dead cat bounce.
@ChaseMacTrades thinks that TTCF could bottom around $0.18 – $0.2 before bouncing.
TTCF stock’s trend is neutral with the stock trading in a sideways channel between $0.5116 and $0.5696. Looking at the indicators, the stock is trading below the 200, 50, and 21 MAs which are bearish indications. Meanwhile, the RSI is extremely oversold at 15 and the MACD is approaching a bullish crossover. It is also worth noting that TTCF stock has broken its lower trendline and is currently trading near its all-time low of $0.28 after announcing its intention to file for bankruptcy.
As for the fundamentals, TTCF stock just witnessed a catalyst in its announcement of its intention to file for Chapter 11 bankruptcy. TTCF announcing its delisting date from Nasdaq will be a future catalyst for the stock as it could allow a dead cat bounce to take place before the company’s delisting. However, until then, TTCF may continue dropping to new all-time lows.
TTCF Stock Forecast
TTCF announcing its intention to file for Chapter 11 bankruptcy may see the stock run in a similar fashion to Bed Bath & Beyond and Cyxtera Technologies earlier this year. That said, TTCF stock is expected to continue falling until TTCF announces its delisting date from Nasdaq which could be the catalyst for a dead cat bounce.
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