Why Did Chesapeake Energy (CHK) Plummet 37% Today?

Shares of oil and gas producer Chesapeake Energy CHK fell hard on Wednesday, closing down over 37%.

Chesapeake has been one of the hardest hit energy stocks in recent weeks, as crude prices plunge and the coronavirus pandemic has curbed demand. In just the past three months, the stock has plunged roughly 80% as of Tuesday.

In order to remain financially viable, Chesapeake announced a 1-for-200 reverse stock split, which means that for every 200 shares of CHK investors currently own, they’ll get only one share back.

The move ensures that CHK will keep trading on the New York Stock Exchange.

However, recovery will be difficult for Chesapeake even after a reverse split. Low oil prices is making it hard for the company to generate revenue, and it is on a tight deadline to pay down hundreds of millions of dollars in debt.

In just the past three months, the stock has plunged roughly 80% as of Tuesday

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