8. Frequent Management Turnover
High turnover in senior leadership (CEO, CFO) can signal internal instability or strategic disagreement.
9. Layoffs or Cost-Cutting Initiatives
Mass layoffs or aggressive cost-cutting without clear long-term strategy.
📊 Market-Based Signals
10. Falling Stock Price
A sustained, sharp decline in share price relative to peers or the market.
11. Credit Downgrades
Downgrades from rating agencies (e.g., Moody’s, S&P) can indicate increased risk of default.
12. Deteriorating Investor Sentiment
Insider selling, lack of institutional investor interest, or poor analyst coverage.
🏦 Strategic and Legal Red Flags
13. Asset Sales or Fire Sales
Selling core assets or divisions to raise cash may signal liquidity issues.
14. Regulatory or Legal Troubles
Ongoing lawsuits, fines, or investigations from regulators.
15. Unusual Financing Moves
Rights issues, high-interest loans, or issuing deeply discounted shares or convertible debt may suggest funding trouble.
🚨 Example:
A company with declining sales, increasing debt, and a rights issue to raise funds could be signaling distress, especially if the rights issue is deeply discounted and not backed by solid growth plans.
