Home Stock Market Commentary Shares of Diamond Offshore Drilling (OTCMKTS: DOFSQ) Double On Pink Sheets Listing...

Shares of Diamond Offshore Drilling (OTCMKTS: DOFSQ) Double On Pink Sheets Listing In Morning Trading – Mike Swanson (04/29/2020)

The price of oil in the United States has crashed in the past few weeks and some futures contracts even went negative. Gasoline demand is down 1/3 from what it was in February because of the economic shutdowns and many energy companies are under pressure. You have no doubt seen many of these stocks crash, but today shares of Diamond Offshore Drilling (OTCMKTS: DOFSQ) are doubling to be one of the most actively traded stocks on the US OTC market. It used to trade as DO on the NYSE, but no longer does anymore.

This was one of the biggest stocks in terms of market cap in the energy patch trading on the NYSE, but the shares collapsed and no longer trade as they did before. The doubling action is hitting the scans of many penny stock traders, but in the big picture the stock has been in a steady decline as you can see from this chart.

The collapse in oil has driven Diamond Offshore to announce that it was going bankrupt. This move forced the NYSE to delist the stock and yesterday it began to trade on the US OTC market under the symbol DOFSQ. That move drew the attention of penny traders who are piling into the action as you can see from these tweets.

Should you buy the stock? One thing about stocks of companies when they complete bankruptcy typically the stocks simply cease to trade anymore and vanish as stockholders get wiped out through bankruptcy proceedings. If the company emerges out of bankruptcy it issues completely new shares to trade. So as an investment buying this stock makes absolutely no sense.

The reality is many people are jumping into crashed energy stocks trying to guess bottoms and in airlines too. Many are also betting that the economy will boom when things “open back” up, but they are not considering what that will actually look like. I talked about that with Carmine Savastano in this podcast:

There are things worth trading in the market. We are now seeing huge strength in gold and the GDX. My top April stock pack has almost doubled this month and I believe it is simply set to go up big again in May. This is a time to trade the good things and avoid stocks that no longer are viable in the long run.