Shares of Beazer Homes USA tumbled 18% to $11.48 Wednesday, but recovered from a drop of as much as 40% earlier in the session after the homebuilder denied rumors it might file for bankruptcy amid ongoing worries about the subprime market. "We have become aware of rumors circulating in the market about Beazer Homes' liquidity and a prospective bankruptcy filing. We do not know where these scurrilous and unfounded rumors started," Beazer said, and referred investors to last week's earnings release and conference call transcript. Beazer posted a Q2 $123M ($3.20/share) loss and revenue fell for the third straight quarter. A Moody's credit officer said, "We're confident that what's going on today is much ado about nothing. If anything, they're more liquid than they were before and they're coming into their fourth fiscal quarter of the year, where they generate the most cash. So we think it's just a bear raid on the company." Beazer also said last week that it had entered into a four-year $500M revolving credit agreement and expected to end the year with more than $300M in cash. Adding to Beazer's woes are concerns about a federal probe of its mortgage-origination business and an SEC investigation into possible securities laws violations. Checks of court dockets in Atlanta, where the company is based, New York and Wilmington, Delaware, found no bankruptcy filing for Beazer.
Sources: Press release, MarketWatch, Bloomberg, AP
Commentary: Beazer Homes Receives Federal Subpoena • How to Trade on Homebuilders' Profitibility
Stocks/ETFs to watch: BZH. Competitors: CTX, DHI, TOL. ETFs: XHB, ITB
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