Really? How do you know this?
That is what people said about Lehman Brothers, General Motors, Washington Mutual, Circuit City, Wachovia, Fannie Mae, Freddie Mac, shall I continue?
Conseco, New Century, PG&E, Enron, Global Crossing, World-Com, Indymac, Delphi Corp, Adelphia Communications, DAL, UAL, virtually every .com company in 1999-2000 to date except AMZN, etc. and this oil company called Texaco (04-12-1987).
I am not making comparisons.
I am just stating the fact that people said these above companies could not fail that their stocks would come back one day..in the log run, etc. They were all wrong. I am just stating this is not always true.
Read my post history.
Here are a couple links from 2007 I tried to warn people about:
You may want to read this:
"BP May Be at Bankruptcy Risk"
A lot of people forgot to read the words, above... "MAY Be" not WILL BE, but "May Be" - suggesting there is risk. The report outlines some of this risk and is support by credible sources. I am just saying that there is a higher risk in a BK over the next 1-3 years than say Apple or Google, can we agree on this point? I am not the only one who is in this camp. read on:
--- Credit Risk:
BP's credit has been downgraded by all three major corporate credit rating agencies: Fitch, S&P, and Moody's:
"BP credit rating downgraded (by Moody's) over oil disaster"
"BP credit hit by six-notch Fitch downgrade"
"S&P downgrades BP's credit rating on future costs of oil spill"
What this means is the cost of credit or to get more credit or loans will go up sharply.
--- Counter Party Risk:
"US bank tells traders not to sign long-term deals with BP after credit rating dives"
Oh, one more thing, "British Petroleum" does not exist anymore. As of May 1, 2001, the legal name of the company is "BP, PLC"
------ Positives ------
1. BP's stock seems a little more stable compared to the volatility as of late which is a plus, but a couple days does not make a trend.
2. BP's Credit Default Swaps (CDS) have improved over the last couple days. This is market forces. BP's liability has not gone way.
3. BP's Chief Hayward did a good job after being grilled by U.S. Congress hearing on 06-17-2010. Short run the stock could have a technical bounce again.
4. Capping the well for good I think should have a sharp bounce in the stock. This could last 1-3 days, then reality of calculating liability should bring the stock down.
edit/ follow up:
That's OK, just wanted you to understand some of the huge and unknown financial risks you are taking.
Keep in mind that bankruptcy does not mean a company will be resolved (that means it does not have to go into Chapter 7 liquidation and goes away). It means the equity is frequently wiped out (aka General Motors), and the company continues, wiping out mush of the debt and liabilities.
I think the U.S. division of BP is at a greater risk than the EU, remaining global divisions.
--- Cash Flow and Political Risk:
1. All of the cash flow from Gulf Operations has gone to ZERO under the Obama moratorium.
2. Obama has threatened to pull BP contracts in the USA, which would effective kill the U.S. division. That is why I said the U.S. BP division is especially at risk.
"Obama Vows Tougher Stance on Oil Industry "
--- Earrings Risk
"Oil slick threatens to kill off Obama's drilling plans"
--- Business Risk (major potential risk of loss of earnings)
"BP holds more than $2 billion in annual US defense contracts and continues to be the premiere provider of fuel to the world's largest consumer of oil and gas: the Pentagon."
--- Political Risk
Keep in mind, it doesn't matter how strong one thinks a company is, when Socialist government leaders want to destroy a company, destroy it they will.
"US may bar BP from federal contracts as oil closes beaches"
"BP May Lose U.S. Oil Leases, Contracts After Spill"
"BP’s Contracts in "Deep" Trouble"
If this BP spill occurred 4000+ miles away from U.S. waters, do you think the outcomes would be the same?
--- Legal Risk
This is a HUGE wild card: Completely unknown at this time, and it may be years before we know the true costs.
What Every Investor Should Know ...
Corporate Bankruptcy (US SEC)
Not saying this will happen, only that the risk is there. I only have 21 years experience, what do I know, I could be wrong.
To buy/ sell BP on FTSE (London):
To buy/ sell BP on NYSE (USA):
So yea, should be clear sailing for BP :-P
You may want to read this too:
"Texaco's Star Falls"
"A Break in The Action" (Texaco)
[portions of original work (c) 2010 Net Advisor™]