Please ensure Javascript is enabled for purposes of website accessibility

Why BGC Partners Stock Dropped 50.9% in December

By Steve Symington - Updated Apr 15, 2019 at 8:05PM

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

No, the brokerage and fintech leader didn't actually plummet. Here's what happened.

What happened

Shares of BGC Partners (BGCP 0.71%) seemingly plunged 50.9% in December, according to data from S&P Global Market Intelligence, after the brokerage and financial technology specialist completed its planned spin-off of Newmark Group (NMRK 0.63%).

After the spin-off was completed on Nov. 30 -- and keeping in mind the S&P 500 simultaneously declined around 9% last month -- BGC stock appeared to drop more than 38% on the first trading day of December. But this decline was the result of its distribution of Newmark Group shares to BGC shareholders.

Fork in the road in a green forest

IMAGE SOURCE: GETTY IMAGES.

So what

More specifically, for every share of BGC Partners Class A common stock owned at the close of business on the record date of Nov. 23, investors received roughly 0.4613 of a share of Newmark Class A common stock. Based on BGC's closing price of $10.54 per share just before the split happened, that equated to around $4.86 per share spun off at the time of completion -- though shares of both companies have drifted lower along with the broader market since then.

Now what

As it stands, BGC no longer holds any shares of Newmark. But both companies surely look forward to honing their focus on their respective core businesses.

When BGC Partners revealed that its board had approved the distribution around the middle of November, for example, company Chairman and CEO Howard Lutnick stated that the move would "enhance Newmark's ability to execute its successful growth strategy and to create value for its investors as a focused real estate services company."

Lutnick added that BGC would aim to drive "strong returns to its stockholders as it invests in technology, hires profitably, and acquires accretively."

Check out the latest BGC Partners and Newmark earnings call transcripts.

Steve Symington has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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

BGC Partners, Inc. Stock Quote
BGC Partners, Inc.
BGCP
$4.27 (0.71%) $0.03
Newmark Group, Inc. Stock Quote
Newmark Group, Inc.
NMRK
$11.24 (0.63%) $0.07

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

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
394%
 
S&P 500 Returns
127%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/19/2022.

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.