Today Beasley Broadcasting announced a confusing sale (they’re selling the station, but not the programming?) of 2 stations in Las Vegas for $12.5 million in cash to a buyer without much of a track record – Silver State Communications sells Internet Service in Reno (My guess is they want Beasley’s towers for WiMax, and don’t really care about the radio stations).
Beasley stock went up 17% in response – WoohoO!
Before you think about rushing in and buying, only 2,537 shares traded, for a total value of stocks traded of about $5,000. When the price fell below $1 back in December (forcing many institutional investors to dump their holdings), that virtually ended trading in this stock. Stocks are worth what a buyer is willing to pay (the bid price), not what a seller is asking for the stock (ask price). The Bid price of the stock closed at $2.00 a share. The stock is carrying a 27.5% “bid/ask spread”. ($2.00/$2.55)
In general, the larger the spread on a stock, the less liquid the market for a stock is, the higher the expense of buying a stock and then reselling, and the higher the risk in general of owning a stock. For comparson, Microsoft has a $.02 spread (20.82/20.84) or less than 0.1%, Intel was $ 15.64/$ 15.68 or $.04 (0.3%)