A stock that falls 50% or more typically does not fully recover. Across the study’s drawdown groups of 50%+, approximately 42% eventually regained their previous high. Among those that recovered, the weighted average was roughly 4.2 years from the final bottom.
For stocks whose decline stopped near 50%–55%, the outlook was better:
- 77% recovered
- Average recovery time: 2.0 years from the trough
- 23% never recovered
Deeper declines sharply reduced the odds of recovery. The study examined 6,500+ NYSE, Nasdaq and NYSE American companies from 1985–2024. It excluded bankruptcies and certain delistings, so the actual recovery rate is likely lower. Morgan Stanley study