Shares of Yellow Corp., a prominent trucking company with nearly 30,000 employees, experienced a stunning surge in value on Monday. Despite reports suggesting that the company had shuttered its operations and was preparing for bankruptcy, the stock soared to its biggest one-day gain in history.
According to The Wall Street Journal, Yellow Corp., also known by its ticker symbol YELL (+105.83%), has indeed ceased operations as it braces for bankruptcy. This development was further corroborated by the International Brotherhood of Teamsters, which received legal notice confirming Yellow’s decision to file for bankruptcy.
Teamsters General President, Sean O’Brien, expressed disappointment but not surprise, stating, “Yellow has consistently demonstrated an inability to effectively manage itself, despite massive worker concessions and substantial bailout funds from the government.”
The issuance of this statement by the Teamsters comes on the heels of their recent plans to stage a strike. The union had been prepared to take action after Yellow missed a deadline for a benefits contribution, though the strike was ultimately avoided.
Despite Yellow Corp’s lack of communication and absence of any press releases, its stock surged by a remarkable 102.3% during afternoon trading. This performance marks the largest one-day gain since the company went public back in June 1983. Remarkably, the stock has seen a staggering increase of 150.9% since hitting a record low of 57 cents on July 27.
Intriguingly, hedge-fund manager MFN Partners LP has revealed that it acquired 12.8 million shares of Yellow Corp. last week, amounting to a significant stake of 24.6% of the outstanding shares.
In summary, Yellow Corp. defied expectations by experiencing an unprecedented surge in value, even amidst reports of impending bankruptcy and the cessation of its operations. The stock’s remarkable performance, coupled with the acquisition of a sizable stake by MFN Partners LP, has captivated market observers.
Troubles for Yellow Freight Company Impact LTL Industry
On July 26, Yellow Freight Company disclosed that it owned 5.7 million shares, and it was revealed on Friday that they spent $4.4 million to buy an additional 7.1 million Yellow shares in the open market between July 26 and July 28. The reason behind this purchase, as stated by the company, was for investment purposes.
Despite Yellow Freight Company’s uncertain future, some LTL companies in the industry are experiencing a pullback. However, this may be a result of a “buy the rumor, sell the fact” scenario, as some stocks had reached record highs just the day before.
Old Dominion Freight Line Inc.’s Stock Drops after Recent Surge
Analyst Jason Seidl from TD Cowen wrote about the potential benefits that certain LTL companies may gain from Yellow Freight Company’s troubles. Old Dominion Freight Line Inc.’s stock (ODFL) dropped by 2.6% in afternoon trading, leading the decliners in the Dow Jones Transportation Average (DJT).
Old Dominion’s stock had closed at an all-time high of $427.59 on July 28, following an impressive 11.6% surge since July 17. It’s worth noting that this surge occurred on the day before Teamsters announced their preparation for a strike.
Saia Inc. and XPO Inc. Stocks Decline Despite Recent Records
Saia Inc. (SAIA) experienced a 1.4% decline on Monday. Similar to Old Dominion, its stock had also reached a record high on Friday, climbing 14.9% since July 17.
Shares of XPO Inc. (XPO) slid by 3.6% on Monday after closing at a record high on July 26. ArcBest Corp.’s stock (ARCB) also faced a setback with a 2.9% decline, even after reaching a 19-month high on Friday.
Mixed Performance for ArcBest Corp.
ArcBest Corp.’s stock had rallied to a fresh high on Friday, despite reporting second-quarter profit and revenue that fell short of expectations. Jason Seidl from TD Cowen believes that the stock’s gain was likely due to expectations of Yellow Freight diversions. He sees ArcBest as a “natural alternative” to Yellow Freight Company.
In conclusion, the troubles faced by Yellow Freight Company seem to have had an impact on the LTL industry. While some stocks experienced a pullback, others reached record highs. It remains to be seen how the industry will continue to adapt and respond to these developments.