Can someblody tell me why BP continues to plunge...

[w4rl0rdx]

Even after the leak is capped?

The stock rallied for a little bit on the news that the oil leak has been stopped but the stock now continues to drop whether the dow is down or up (as it was slightly today).

Anyone care to explain? is there something going on behind the scenes or maybe Cramer told people to buy but instead they sold which is causing the stock to drop its price.

 

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[Jonleehacker]

Unknown cost of cleanup, risk of litigation and therefore still no dividend. Market hates uncertainty.

 

[rod_lleyton]

I took a punt and bought during the crisis and it's gone up around 25%, so I'm not sure what you're referring to... the slight dip?

Like JLH said, the uncertainty is warranted, especially fear of having to raise capital (even if they've already secured some bank funding, and the payout is done perpetually). Investors hate capital raising. Not saying it will happen, but there are speculations abound.

I haven't looked into this too much, but it would have taken Exxon a while to get over the Valdez disaster, so I would assume BP to recover, albeit slowly.

 

[C9Consulting]

It plunges because people think that it's not a socially conscious company, with that consumers aren't buying their product and business are distancing themselves from their products (both of which affect future bottom lines).

I could go into thousands of reasons as to why BP keeps falling. But either two things are going to happen...1) the stock will rebound in a big way after years, could be up to 10. 2) the company will get scooped up and then the value of the stocks will inflate. Either way, people should be looking at this company as a major buy.

 

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[ramy98]

1. The well is technically not capped for good..
2. New storm brewing in the gulf that may hamper efforts to cap the well for good / clean up efforts hampered....

 

[biophase]

Even after the leak is capped?

The stock rallied for a little bit on the news that the oil leak has been stopped but the stock now continues to drop whether the dow is down or up (as it was slightly today).

Anyone care to explain? is there something going on behind the scenes or maybe Cramer told people to buy but instead they sold which is causing the stock to drop its price.

Plunge? It's going up or sideways.

 

[Russ H]

It's all about uncertainty.

The greatest uncertainty being the total pricetag that BP is going to pay-- not millions, as in past disasters-- but BILLIONS.

That may seem like an easy jump on the tongue (replacing the "m" in millions with a "b"), but it means ONE THOUSAND TIMES MORE MONEY going out to all kinds of places.

Even with a company the size of BP, that's significant. Not bankrupt-able, but it will still cost them-- and their shareholders.

-Russ H

 

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[SKM430]

It's all about uncertainty.

The greatest uncertainty being the total pricetag that BP is going to pay-- not millions, as in past disasters-- but BILLIONS.

That may seem like an easy jump on the tongue (replacing the "m" in millions with a "b"), but it means ONE THOUSAND TIMES MORE MONEY going out to all kinds of places.

Even with a company the size of BP, that's significant. Not bankrupt-able, but it will still cost them-- and their shareholders.

-Russ H

THIS! It's all speculation at this point. The cost of the clean-up and any bi-stander damage it may cause. And let's not forget to talk about the 20 or so billion that's in gov't escrow or whatever for said clean-up. I think the fact that Hurricane Bonnie is in full force is causing even more jitters in investors minds.

 

[tchandy]

I'm up from where I bought and just holding and waiting. Not too concerned with the "little" ups and downs.