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GT Advanced Technologies Inc Bankruptcy Raises Questions

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With shares of GT Advanced Technologies Inc (NASDAQ: GTAT) trading down to under $1.00 a one point this week on news of the company filing Chapter 11 bankruptcy protection, the sudden and unexpected fall has raised a few questions for investors.

Until more clarity emerges on the financial shape of GT Advanced's pre-bankruptcy announcement, everything is speculation. Some analysts had questions to ponder.

"This is just off the charts," said Bill Feingold, co-founder of Valhalla, New York-based Hillside Advisors LLC. To trade well above par and then "go to bankruptcy in one fell swoop, you just simply don't see it."

Related Link: GT Advanced Technologies Inc: The Technical Aftermath

"I can't recall one like this before," Lawrence Creatura, a fund manager at Pittsburgh-based Federated Investors Inc., told Bloomberg. Federated did not own GT Advanced shares as of its most recent filing, he said. "Ordinarily, bankruptcies are a ‘slow death by a thousand cuts' type of affair. This one is unusual in its suddenness."

Cowen analyst Jeffrey Osborne said the bankruptcy filing was "certainly a surprise" and likely because Apple Inc. has called back a loan it made to GT Advanced.

Pacific Crest's Weston Twigg said Monday that the GT Advanced/Apple relationship may likely end, with Apple probably taking ownership of the factory equipment and exercising rights to use GT Advanced's sapphire IP.

Shares of GT Advanced traded at $1.08 Wednesday afternoon, down 11 percent.

 

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