Pacific Sunware (PSUN) Stock: Here's Why It's Tanking!

Pacific Sunwear of California, Inc. (NASDAQ: PSUN)

Pacific Sunwear of California is having an incredibly hard time in the market at the moment, and for good reason. While it took some time to dig up the news, it seems as though the company’s financial strains are leading to big issues at the moment. Today, we’ll talk about the financial issues the company is facing, why PSUN is facing such issues, what we’re seeing in the market today, and what we can expect to see from PSUN moving forward. So, let’s get right to it…

Pacific Sunwear To File Bankruptcy

Earlier this morning, I received information that Pacific Sunwear of California has hit rock bottom when it comes to finances. Unfortunately, the company has no choice at this point, but to file bankruptcy. Over time, the company has had a hard time keeping sales above the water. Unfortunately, overhead expenses have become too much. As a result, the company has decided that it will be filing. According to the news I received early this morning, it is expected that an official bankruptcy filing will come as soon as next week.

Why PSUN Is Having Such A Hard Time Financially

Bankruptcy is a huge issue for any company. However, the company didn’t get to this point over night. In fact, it took some time for the company’s finances to get to this point. Pacific Sunware has been struggling with sales for a long time at this point. While people above the age of 21 have been purchasing the products offered by the company, it seems as though PSUN has had an incredibly hard time connecting with the age group that leads to large amounts of sales in their sector… teenagers.

What We’re Seeing In The Market As A Result

As investors, one of the first things that we learn when we get started is that the news moves the market. Naturally, good news will cause gains in the stock associated with the news, while bad news will cause losses. Of course, the size of the movement has to do with the severity of the news. Unfortunately, bankruptcy is about as severe as any piece of news we can get. So naturally, the news surrounding PSUN was overwhelmingly negative, leading to massive losses in the value of the stock. Currently (11:28), the stock is trading at $0.11 per share after a loss of $0.24 per share or 67.96% thus far today.

What We Can Expect To See Moving Forward

Moving forward, things are really up in the air for PSUN. Bankruptcy is a very big deal, and when companies file it, very few have the leadership needed to maintain their business following the bankruptcy. With that said, in the short run, I’m expecting to see further declines on the value of the stock. In the long run, it is possible that the company can make it over the hurdle, but it will take some time. In order for PSUN to become profitable again, it is going to need to come up with a product offering that appeals to teenagers. If it can’t get teenagers excited about its products, chances are that we’re going to see downward movement for the long run until the company decides to close its doors. All in all, things are getting incredibly concerning for PSUN and its investors.

What Do You Think?

Where do you think PSUN is headed moving forward and why? Let us know in the comments below!