Please ensure Javascript is enabled for purposes of website accessibility

Why Barnes & Noble Inc. Stock Surged Today

By Jeremy Bowman - Oct 4, 2018 at 11:44AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Shares of the bookseller spiked after the company said it could possibly be sold.

What happened

Shares of Barnes & Noble Inc. (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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Barnes & Noble, Inc. Stock Quote
Barnes & Noble, Inc.
BKS, Inc. Stock Quote, Inc.
$2,307.37 (4.11%) $91.16

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/18/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.