Tellurian (TELL 7.71%) stock saw dramatic sell-offs in Friday's trading. The company's share price closed out the daily session down 13.6%, according to data from S&P Global Market Intelligence.
Tellurian published a press release yesterday announcing that it had hired a financial advisor to help with balance sheet management, prompting big pullbacks for its share price. While there wasn't anything in the press release that explicitly pointed to bearish developments for the company, it's likely that many investors see the move as a sign that the liquefied natural gas (LNG) specialist may be moving closer to bankruptcy.
Tellurian's hire highlights uncertainty
When a company that has been struggling financially announces that it has hired a new financial advisor, investors have been conditioned to interpret the development as a negative sign. In many cases, these announcements are followed by developments that advance major restructuring initiatives or potential bankruptcy proceedings.
While it's not necessarily clear that Tellurian will proceed down either of those roads, it's also not surprising that investors interpreted the recent hiring announcement as a bearish signal. Today's big sell-offs also follow a surge in bullish sentiment that occurred early in yesterday's trading spurred by news that two institutional investors were increasing their holdings in the company.
What comes next for Tellurian?
With the announcement that Tellurian has hired a new financial advisor, it's not unreasonable to think that the company could be exploring selling off assets or pursuing potential bankruptcy-filing avenues. On the other hand, the company says that the new advisor has been brought on board to help shape the business' commercial structure and assist with balance sheet management.
