– It’s a mystery – E24

Updated with closing price at 4.30pm: Norwegian stock was up 71.37 percent on Thursday.

Despite Norwegian being under bankruptcy protection in Ireland and Norway, the share rose sharply on the Oslo Stock Exchange on Thursday.

At most, the price was up 90 percent, before the rise slowed to around 60 percent.

Nordea manager Robert Næss is struggling to understand the increase.

– It’s a mystery. It’s easy to say that some stocks like Tesla are overpriced, and then it can be explained in some way given that pretty extreme things happen.

– But Norwegian is in bankruptcy. The point is, the company desperately needs money. They have announced that they need money and are probably working on it. But I suppose if new shareholders come in, they will make two demands. One requirement is that lenders must take a loss, and the other is that the current share price for practical purposes be set to zero, he says.

– Here participation should be zero

Trading in the stock was halted at 11 o’clock when the stock rose above 60 percent.

A mechanism in the new trading system of the Oslo Stock Exchange means that trading is temporarily stopped when price effects become very important. When the stock traded again a few minutes later, the stock was up 76 percent.

The increase in Norwegian stocks is currently sending the market value to NOK 3.6 billion.

There is an increase of 35 percent on Wednesday, nine percent on Tuesday, and three percent on Monday. Since Norwegian filed for bankruptcy protection in Ireland, the price has increased by around 90 percent.

– People also win the lottery, but here participation will be zero. There may be some who think it’s fun to trade stocks, but just come in and buy and stay, I can’t explain it either, says Næss.

Leasing companies, which unwittingly became the largest shareholders following Norwegian’s previous bailout this spring, have shrunk considerably.

Small savers in Norway and Sweden, on the other hand, have bought a lot.

At the Avanza online broker in Sweden, Norwegian has become the most popular foreign stock. 52,785 clients owned the stock earlier this week, up from 1,866 in January.

Tens of thousands of Nordnet customers also participate.

– I don’t understand anything about the climb. There is a lot of trading in stocks and we may see a self-reinforcing prophecy. When someone sees that participation is increasing, more people are pushing it, says investment economist Mads Johannesen at Nordnet.

– Is it wise to buy Norwegian stocks now?

– No, that’s not smart. The company is in bankruptcy and it is not yet known what the company will look like when that process is complete. It is an extremely high risk.

Fighting to avoid bankruptcy

In recent days, Norwegian has taken several steps in the fight to survive, after passenger numbers failed as a result of travel restrictions during the pandemic, a crisis that affects all aviation.

On Tuesday, the airline received bankruptcy protection in Norway, a day after the Irish court granted protection to several Irish subsidiaries and the Norwegian parent company.

This gives Norwegian several months’ reprieve to sew the rescue package, but does not guarantee that the company will survive.

Norwegian shareholders will decide on the airline’s rescue plan on December 17, the second in just over six months. It means that investors will inject up to $ 4 billion of capital, while creditors will turn the debt back into equity.

The process generally means that current stocks become of little value, because the number of stocks increases dramatically when new capital comes in and debt is converted to stocks.