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When a company declares bankruptcy, its stock value typically plummets, often becoming nearly worthless.
Shareholders are left facing significant losses, as their investments in the company's stock lose value rapidly.
In bankruptcy, creditors have priority over shareholders, meaning they get paid first from any company assets.
Often, trading of the bankrupt company's stock is halted or severely limited on stock exchanges.
The stock may be delisted from major stock exchanges, further reducing its liquidity and value.
If the company reorganizes under bankruptcy protection, it may issue new stock, diluting the old shares.
In many cases, shareholders may lose their entire investment if the company's assets don't cover debts.
A significant bankruptcy can impact the broader market, affecting investor confidence and other stocks.
Bankruptcy news makes investors cautious, often leading to a more risk-averse market environment.