2023-05-11 12:57:14 ET
Goodyear Tire & Rubber Co ( NASDAQ: GT ) opened about 25% up this morning after Elliott Management revealed a sizable stake in the tire manufacturing company.
Here’s what Elliott wants Goodyear to do
On Thursday, the activist investor said it had a 10% economic interest in Goodyear and pushed for a right to name five new independent directors to its board.
Over the past decade, owning Goodyear stock has been a disappointment. The Poor stock performance is a result of margin erosion, suboptimal go-to-market strategy and unfocused brand strategy.
In its letter to the board , Elliott recommended that the Nasdaq-listed firm starts an operational review to improve margins and explore ways to monetise the company-owned stores.
Goodyear stock is now up close to 40% versus the start of the year.
Goodyear stock could be worth over $21
Elliott sees the Akron-headquartered firm trading at more than $21 a share if the management executes on its proposal.
The stock market news arrives only days after Goodyear Tire & Rubber Co reported revenue for its first financial quarter that came in slightly below the Street estimates. Reacting to today’s development, famed investor Jim Cramer said on “ Squawk on the Street ”:
I don’t believe this will initially lead to anything other than a conversation with the board about what Goodyear could do better. But I’m concerned it’s underperformed and I think Elliott [has something worthwhile to say here].
Wall Street currently has a consensus “overweight” rating on the Goodyear stock.
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