Goodyear has a turnaround plan. This is what companies say when the previous plan was driving toward a cliff and someone finally grabbed the wheel. The tire maker is restructuring its business, which means firing people and closing plants while executives explain why this time will be different.
The company is also refinancing years of debt. Years. Plural. Goodyear has been borrowing money for so long that some of this debt probably predates the invention of the radial tire. They're paying interest on loans taken out to pay interest on other loans, a financial Ponzi scheme that would make Charles Ponzi say "guys, maybe just make better tires."
Burning rubber and cash simultaneously is an impressive feat. Most companies pick one. Goodyear looked at that choice and said f*ck it, we'll do both. They're manufacturing tires at a loss while spending money they don't have to restructure a business model that stopped working when people realized you could buy cheaper tires that also grip the road.
Retail traders see "turnaround plan" and hear "opportunity." They read about a legacy American manufacturer restructuring its debt and think this is their chance to get in before the bounce. They're buying shares of a company that's burning through cash reserves like a teenager with dad's credit card, except the teenager will eventually get grounded and learn a lesson.
The technical analysis on Goodyear is simple. Draw a line from where the stock was five years ago to where it is now. That line goes down. Draw another line showing where it's headed. Same direction. Congratulations, you've just done more research than the guy who bought calls because the tire shop near his house looks busy.
Goodyear will either successfully restructure and become a smaller, less profitable version of itself, or it won't and bondholders will own a tire company. Either way, your shares will be worth less than the rubber they're printed on.
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