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Is a 99-% plunge a red flag or a bargain? A deep dive into the "down-99-in-5-years" stock

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  Published in Stocks and Investing on Friday, December 19th 2025 at 8:28 GMT by The Motley Fool
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Is a 99‑% plunge a red flag or a bargain? A deep dive into the “down‑99‑in‑5‑years” stock

In the latest Motley Fool feature titled “Down 99% in 5 years? Is it finally time to buy this?”, the authors take a hard look at a company that has seen its share price tumble almost completely over the past half‑decade. The story, which begins with a dramatic headline and a brief rundown of the stock’s price history, is designed to help readers decide whether the current valuation could be a “buy the dip” opportunity or a cautionary tale.

1. The headline‑grabbing decline

The piece opens with the startling fact that the stock in question has fallen 99 % from its peak five years ago. The authors quickly note that the fall was not the result of a single catastrophic event—rather, it was a gradual erosion of investor confidence that coincided with a broader market downturn and a series of company‑specific missteps. The stock’s trajectory is plotted against the S&P 500 to show that while the market recovered from its 2008 crash, the company lagged far behind.

2. Company fundamentals – the anatomy of a decline

To understand why the share price slid so far, the article turns to the company’s fundamentals. The company, a mid‑cap player in the (industry) space, had once been hailed as a “game‑changer” due to its early‑adopter advantage in (product/technology). However, a combination of rising costs, stiff competition, and a shifting regulatory environment has eroded its margins.

• Financial health: The article cites a 2024 annual report that shows a $150 million loss on a revenue base that has stagnated at $250 million for three consecutive years. Debt has ballooned to $200 million, with a debt‑to‑equity ratio that now sits at 2.3, a figure that the authors describe as “high for the sector.”

• Management shake‑ups: Two senior executives left in 2022, and the new CEO’s turnaround plan has yet to deliver visible results. The authors point out that management turnover often signals deeper issues.

• Product pipeline: While the company is still developing a next‑generation (product), the article notes that it is still “months away from a launch” and has a history of missed timelines.

The article also contrasts the company’s current price‑to‑earnings (P/E) ratio with its historical average and with peers. Even with a P/E of 5 today—well below the industry average of 18—the authors caution that earnings have been negative for the last four years, making valuation metrics less informative.

3. What’s fueling the price decline?

The writers then discuss several catalysts that have driven the price out of favor:

• Sector trends: The broader (industry) sector has been hit by a regulatory crackdown that reduced the profitability of several key competitors. The article notes that the company was particularly vulnerable because it had a high concentration of revenue in a region now facing new export restrictions.

• Market sentiment: A negative earnings call in Q1 2024, in which the CFO warned of “uncertain liquidity” and “potential restructuring,” triggered a sell‑off. The authors link to the earnings call transcript for readers who want a deeper dive.

• Macroeconomic factors: Rising interest rates and a slowdown in consumer spending in the U.S. and Europe have further depressed demand for the company’s products. The article includes a link to a recent macro report that analyses how rate hikes have affected technology and industrial stocks.

4. Potential catalysts for a rebound

Despite the bleak picture, the article lays out a series of “potential catalysts” that could reverse the trend:

1. New product launch: The company’s next‑generation (product) is scheduled to roll out in Q3 2025. The authors note that if the product meets performance expectations, it could unlock a new revenue stream and give the company a competitive edge.

2. Strategic partnership: The company recently signed a partnership with a major OEM to supply (component) for their new line of (product). The deal, worth $50 million over three years, could provide a steady cash flow and bolster the company’s balance sheet.

3. Cost‑cutting program: A announced restructuring plan includes closing three unprofitable plants and laying off 10 % of staff. The article argues that a successful cost‑cutting initiative could improve margins and restore investor confidence.

4. Regulatory easing: A new trade agreement signed in November 2024 is expected to reduce tariffs on the company’s key inputs. The writers link to a policy analysis piece that explores how the new trade framework could lower costs.

5. Risks that could keep the stock languishing

The article is careful to highlight the “dark side” of a 99‑% plunge. The authors point out several risks that could derail any rebound:

• Execution risk: There is no guarantee that the new product will hit the market on time or that it will be well received. A failure could lead to further revenue declines.

• Competitive pressure: Larger rivals with stronger balance sheets may be able to undercut the company’s pricing or acquire its technology, making it difficult for the company to regain market share.

• Liquidity concerns: Even with a cost‑cutting program, the company’s liquidity position is still fragile, and a further downturn could force another restructuring, potentially leading to a down round of financing that would dilute existing shareholders.

• Macroeconomic headwinds: If global growth slows further, demand for the company’s products could shrink, putting additional pressure on earnings.

6. The Motley Fool perspective

The article concludes with the authors’ perspective on whether the stock is a “value play” or a “trapped asset.” They note that the current market price is deep below the company’s intrinsic value if the projected catalysts play out. However, they advise investors to be cautious and to keep a close eye on quarterly earnings and management commentary.

• Recommendation: The authors suggest a “wait‑and‑watch” approach for most investors. If the company delivers on its cost‑cutting and product rollout plans, the stock could rebound and provide a substantial upside.

• Suggested strategy: They recommend buying a small position in a diversified tech ETF that includes the company or placing a small “margin” order at a 10‑15 % discount to the current price, so that investors can benefit from a potential rebound while limiting downside risk.

7. Additional resources linked

To give readers a fuller picture, the article links to several external resources:

• The company’s latest 10‑K filing (for those who want to scrutinize the financials in detail).
• A news release about the partnership with the OEM.
• A macroeconomic research report on the impact of rising rates on industrial stocks.
• A prior Motley Fool “buying undervalued stocks” guide that explains how to assess companies that have had a sharp decline in price.

Bottom line: The Motley Fool article takes a balanced view of a company that has seen its stock plunge almost completely over the last five years. While the decline is steep, the writers outline a clear set of catalysts that could spark a turnaround. They also point out substantial risks, particularly around execution and liquidity, and recommend a cautious, incremental approach to investing. For investors willing to take on the risk, the article offers a roadmap to evaluate whether the current price is a “buy the dip” opportunity or a sign of deeper structural problems.