Personal Finance

Why Barnes & Noble Inc. Stock Surged Today

A blurry image of a woman reading a book in a Barnes & Noble store.

What happened

Shares of Barnes & Noble Inc. (NYSE: BKS) were rallying today after the struggling bookseller said it would look into strategic alternatives for the company, which could include a sale or going private. Not surprisingly, the stock spiked on the news, with shares up 20.6% as of 10:54 a.m. EDT.

A blurry image of a woman reading a book in a Barnes & Noble store.

Image source: Barnes and Noble.

So what

In a press release, the retailer said it would "enter into a formal review process to evaluate strategic alternatives for the Company," adding that a number of parties have expressed interest in buying the company, including Chairman Leonard Riggio.

The company also said it had observed the rapid accumulation of stock by an unidentified party and would adopt a "poison pill" shareholder rights plan in order to prevent a hostile takeover of the company.

This is not the first time that the bookseller has sought a sale. The prospect has come up several times since the financial crisis, as the company has been unable to grow or deliver meaningful profits. A separation from the education division in 2015 has not helped the core retailing segment.

Now what

Given the prospect of a sale, today's pop is certainly justified. At this point, there seems little likelihood of a significant turnaround in the business, as Amazon has come to dominate the book industry. In its most recent quarterly report, Barnes & Noble said comparable-store sales fell 6.1%, and its per-share loss widened to $0.23. With numbers like that, shareholders should be hoping for a sale. Expect more volatility from the stock as news comes out about a potential deal.

10 stocks we like better than Barnes & Noble

When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor , has quadrupled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Barnes & Noble wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of August 6, 2018

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

AMZN

Other Topics

Stocks

The Motley Fool

Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Learn More