What happened
Shares of Verint Systems (VRNT 0.07%) 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.
So what
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.
Image source: Getty Images.
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.
Now what
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.
