28 June 2020: Chesapeake Energy files for bankruptcy
On June 28, 2020 Chesapeake Energy, a pioneer of the shale gas boom, filed for Chapter 11 bankruptcy, burdened by billions in debt after years of low natural gas prices and the pandemic oil crash. Under co-founder Aubrey McClendon it had grown aggressively with borrowed money. Shareholders were wiped out, and the company emerged smaller and owned by its creditors.
The lesson: Debt-fueled growth in a commodity business works until prices fall; then the lenders end up owning it.
What it meant for investors
$1,000 in Chesapeake Energy at the start of 2020 → $0 today, vs $2,092 in the S&P 500.
We start the clock at the start of 2020, the year it happened. Chesapeake Energy went to zero, so the position is worth nothing at all; the index turned the same money into $2,092.
What Chesapeake Energy teaches: Producers who succeed too well can destroy their own prices; in commodities, a supply boom often benefits customers far more than the pioneers.
| Bought in | Price then | Worth today | S&P 500 would be |
|---|---|---|---|
| 2015 | $19.00 | $0 | $3,301 |
| 2018 | $4.00 | $0 | $2,519 |
| 2020 | $0.8 | $0 | $2,092 |
green = beat the S&P 500 · red = lost money
What if you bought Chesapeake Energy? Every starting year and the full story →
Could you have called it at the time? The wheel picks the year, you pick the position, ten seconds a pick.
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