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Why iMedia Brands (IMBI) Stock Is Up 34.2% Despite Bankruptcy

Simon Mugo trader
Updated 5 Jul 2023

The iMedia Brands Inc (NASDAQ: IMBI) stock price had risen 34.18% during premarket trading as investor interest in the company surged. Over 8.22 million IMBI shares had changed hands at writing as buyers flocked to the shares despite its looming bankruptcy.


YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY.


The company owns the TV shopping network ShopHQ and filed for Chapter 11 bankruptcy protection in the US Bankruptcy Court for the District of Delaware on June 28, 2023. You would imagine that filing for bankruptcy would scare away investors from a firm, but that’s not the case nowadays.

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We have retail traders piling into the stocks of companies that have filed for bankruptcy protection since the meme stock rally of 2021 as they try to defeat institutional investors who like shorting the stocks of companies on the brink of a collapse. 

iMedia Brands cited declining cable subscribers, high inflation, and lower consumer discretionary spending due to the impact of the high inflation levels. The Company continues to operate its business as a “debtor-in-possession” under the jurisdiction of the Bankruptcy Court and per the applicable provisions of the Bankruptcy Code.

The Company has requested approval of various “first-day” motions containing customary relief to enable the Company to continue ordinary course operations during the Chapter 11 Cases. The company also said there is no guarantee that its ordinary shareholders would receive compensation after bankruptcy. 

iMedia expects to default on some debt obligations, including its 8.50% Senior Notes due 2026, dated September 28, 2021, by and between the Company and the U.S. Bank National Association. The company had about $81.7 million in outstanding principal and accrued interest under the Senior Notes.

The firm will likely default on its promissory notes worth about $3.5 million in outstanding principal. Furthermore, the company has a delisting notice from the Nasdaq listing qualifications department and does not intend to appeal the determination. 

iMedia’s prospects are not promising. Hence, value investors should stay away from the stock. 

*This is not investment advice. 

iMedia Brands (IMBI) stock price. 

The iMedia Brands (IMBI) stock price rallied 34.18% to trade at $0.1590, rising from Monday’s closing price of $0.1185.


YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY.


Simon has over six years of professional trading experience across FX, commodities and equities. He has a strong passion for financial markets and is particularly focused on price action trading