3

I'm interested in American Airlines stock (AAMRQ). Recently they announced a merger with US Airways. The resulting company is said to be worth $11B (USD). Tom Horton, the CEO, said that after creditors are paid out, stockholders of AAMRQ stand to receive 3.5% of the new company. If we assume an 11 billion dollar valuation, 3.5% of that would be $385,000,000. There are ~335,000,000 outstanding shares of AAMRQ. My math tells me these shares should be worth about $1.15/share. However, as of the merger announcement the shares of AAMRQ have shot up drastically from ~$1.20 to ~$2.53.

So my question is - how come the market thinks there's so much value in AAMRQ? A price of 2.50 gives the company a market cap of $837,000,000! Is it possible it will all come tumbling down in the next few days?

3
  • I'm not sure why this is being downvoted? Is there a more appropriate forum for this question?
    – Eric
    Feb 16, 2013 at 1:07
  • I did not down-vote, but this is close to off topic for the forum. And there may be no more appropriate stackexchange for it, as stackexchange does not purport to cover the entire world.
    – sdg
    Feb 18, 2013 at 14:32
  • and in any case, even if not off topic, it is pretty much a wholly speculative answer you are asking for, with little longevity or future re-use.
    – sdg
    Feb 18, 2013 at 14:33

1 Answer 1

1

enter image description here

There are things that are clearly beyond me as well. Cash per share is $12.61 but the debt looks like $30 or so per share. I look at that, and the $22 negative book value and don't see where the shareholders are able to recoup anything.

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .