BNED - Barnes & Noble Education: Recapitalization Transaction Strengthens But Major Overhang Remains
2024-07-19 07:00:00 ET
Summary
- Following a heavily dilutive recapitalization transaction and subsequent 1:100 reverse stock split, Barnes & Noble Education's shares have been quite volatile as of late.
- Two weeks ago, the company reported better-than-expected results for FY2024 with Adjusted EBITDA exceeding management's projections amid a 37% increase in First Day program revenue.
- Going forward, cash flows should benefit from substantially lower average debt levels. As a result, Barnes & Noble might start to generate free cash flow in the current fiscal year.
- Thursday's break-out in BNED stock to new post-recapitalization highs on massive trading volume might very well result in some follow-through on Friday and going into next week.
- However, the federal government's recently announced plan to end automatic textbook fees remains a major overhang for the company. Given the potential make-or-break character of the proposed changes, I prefer to remain on the sidelines.
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Barnes & Noble Education: Recapitalization Transaction Strengthens, But Major Overhang Remains