Stock Emerges from Restructuring to Post Big Gains
Stocks jumped out to a solid start Friday after a strong jobs report suggested a US economy still clearly on a growth trend.
US labor markets continue to create new jobs, but offer little actual wage growth—this fact may have spurred markets on today: muted wage growth will encourage the Federal Reserve to keep a moderate pace of rate hikes in the coming months.
Today’s Top Performer is a long-suffering stock that had fallen below $.01 on the markets for a long period of time. The stock is up big today, however, as investors bet on a successful turnaround.
Intercloud Systems provides cloud-based automation solutions to private enterprises. Their company has been bogged down in a class action lawsuit for years, draining vital operational liquidity and bringing this stock’s price to its knees.
This morning, ICLD’s CEO released a shareholder letter updating investors; the letter stated that, as of December 5, the class action lawsuit and its associated legal entanglements have finally been settled and put in the past.
ICLD is finally free to focus capital on innovative new cloud products while working to further strengthen their balance sheet (the company built up a substantial debt load in recent years). They managed to emerge from the year’s long restructuring process without invoking bankruptcy protection.
Investors bought the stock on heavy volume after the update, driving the stock up 80% at the time of this writing.
Another angle seems to fuel the acceleration here: as part of their restructuring efforts, ICLD had been offering debt-to-equity exchanges as part of its restructuring efforts. Many debtholders immediately liquidated their stock upon receipt, driving massive dilution. This process is winding down, however, and ICLD even hopes to execute a reverse split.
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