RadioShack Under $1: The Clock Is Ticking

RadioShack Corp (RSH). just tumbled below the stock market’s version of the Mendoza Line.

Shares dropped under $1 Friday morning for the first time ever, as the beleaguered electronics retailer continues to struggle and bankruptcy rumors swirl. Early this month the company reported ugly quarterly numbers that sparked some dire outlooks from Wall Street analysts, including one who slashed his price target to $0 and said the shares were worthless.

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Investors appear to be most concerned about RadioShack’s cash position.  As of May 3, the company had $61 million in the bank, down from $180 million at the end of 2013. The company said earlier this month that it had enough cash to last at least 12 months, but that’s contingent on an immediate improvement in sales and margins, no easy feat.

RadioShack has “too many unprofitable stores, and no way to close the majority of them without filing for bankruptcy,” David Strasser, an analyst at Janney Capital Markets, recently said. That constraint is likely to keep shares near the floor unless the chain convinces its lenders to allow more store closures — without having Chapter 11 force their hand. RadioShack has credit agreements that prevent it from closing more than 200 stores this year without approval from some of its major creditors.

A RadioShack spokeswoman declined to comment.

RadioShack shares recently fell 12% to 91 cents. The stock’s slide has picked up steam in recent weeks, falling 40% since the company’s earnings report on June 10. Shares are down more than 70% over the past 12 months.

–Drew FitzGerald contributed to this report.