Banco Popular Edges Closer to Nasdaq De-listing

According to the rules of NASDAQ, a company must maintain a stock value of greater than $1.00 to remain on the NASDAQ stock market. As of the close of Friday's trading, Banco Popular finished the day at $1.37. So far, they have been as low as $1.30, so they are getting dangerously close to either de-listing from NASDAQ, un-splitting their stock (assuming it has split sometime during it's history), or a hostile take-over.


An option available to them, but which usually causes further de-valuation, is to un-split their shares. In order to maintain a company's stock price so that "normal" traders can afford it, sometimes a company can split it's stock. For example, let's say at one point Banco Popular was valued at $50. They could declare a stock split and issue two shares for every existing single share, which would reduce the price to $25. I'll have to do additional research to see if Banco Popular has done this, but I don't ever remember hearing about a Banco Popular stock split.

History

As of October 5th, 2006 Banco Popular closed at $17.32. Since then, they've dropped like an anchor to $1.31. With 1 billion shares outstanding, that means in five years, Banco Popular's market value has dropped in from $17.3 billion to $1 billion.

Conclusion

As the largest, and some would say most influential, company in Puerto Rico, this is another threat to the future of Puerto Rico. Just since the beginning of 2011, the value of BPOP has fallen by 50%. So just in 2011, their total market value of has dropped from roughly $2.8 billion, to $1.4 billion. Which begs the question, is Banco Popular still the biggest company in Puerto Rico?

Nightmare Scenario

Another very unfortunate scenario is a hostile take-over. Whenever a theoretically sound company suffers this kind of devaluation they open themselves to a hostile take-over. As happened to many "solid" companies during the 1980's, BPOP has exposed themselves to "corporate raiders." A company with a large cash reserve could buy up all of the outstanding shares and then take-over Banco Popular, dismantle Banco Popular's assets, and sell them off to the highest bidder. If that were to happen, it would set-off a crash in Puerto Rico's economy that would lead to anarchy.