Shares of Verint Systems (VRNT 1.30%) fell today after the company officially announced yesterday that it had completed the spin-off of Cognyte Software.
The tech stock was down by 35.1% as of 11:32 a.m. but the share price slide is only part of the story. With the spin-off, Verint stockholders now hold shares of Cognyte as well.
Verint said in a press release that the spin-off "marks the start of Verint's journey as a pure-play customer engagement vendor." The company said that Verint shareholders will receive one share of Cognyte common stock for each share of Verint common stock they own.
This puts today's Verint share price slide into context. When public companies spin off parts of their business into new, publicly traded companies -- as Verint did today -- the parent company's stock drops by the value of the newly created company.
So while Verint's stock fell by 35.1% this morning, the company's shareholders also now own stock in Cognyte Software, which is up 26.7% today.
"Verint becoming a pure-play customer engagement company is happening at the exact right time – a time when digital transformation is driving significant change in how brands engage with their customers," Verint CEO Dan Bodner said in a statement.
Verint investors will have to decide whether they want to remain invested in both companies, now that they've split into two. Investors should take a close look at Cognyte, which is a security analytics software company, independent of their Verint investment to determine whether or not to continue holding onto the stock.