What happened
Shares of Chesapeake Energy (CHKA.Q) continued plunging today. As of 10:45 a.m. EDT on Wednesday, the energy company's stock was down 34.7%. The main driver was a one-for-200 reverse stock split the company completed today, though lower oil prices didn't help matters either.
So what
Chesapeake Energy completed its reverse stock split today, boosting its share price to roughly $15 a share. That enabled the company to regain compliance and stay listed on the New York Stock Exchange, which requires shares to trade above $1 apiece.

Image source: Getty Images.
Investors, however, continue abandoning the stock. That's because the company is crumbling under the weight of its debt. It had more than $9 billion outstanding, including around $300 million maturing later this year. It had hoped to sell assets to retire that debt, but cratering crude oil prices have taken asset values down with them. Because of that, Chesapeake reportedly hired advisors to help restructure its debt, which it might do in bankruptcy.
Adding further weight to Chesapeake's stock is that oil prices keep falling. Crude was down another 1% in early morning trading today, falling below $20 a barrel. That's because it continues to pile up in storage as a result of continued demand destruction from the COVID-19 outbreak. Global inventories are swelling by 12 million barrels per day (BPD), which will overwhelm the industry's storage capacity within the next month. That will put more pressure on oil prices in the near term, even though OPEC agreed to a historic 9.7 million BPD supply reduction agreement earlier this week.
Now what
Shares of Chesapeake Energy remain under intense pressure due to the combined impact of low oil prices and its high debt level. Barring a needle-moving asset sale, that combination will likely force the company to file for bankruptcy. That financial restructuring will probably wipe out equity holders, which is why investors should steer clear of this stock.