Why Barnes & Noble (BNED) Stock Is Volatile

Barnes & Noble Education Inc BNED shares are trading lower by 29.6% to $0.09 during Tuesday’s session after the company announced it has completed equity and refinancing transactions, new leadership changes and a 1-for-100 reverse stock split.

The company says the equity and refinancing transactions with Immersion Corporation and existing partners has strengthened its financial position with over $100 million in new equity. This includes raising $95 million in new equity capital through a $50 million private investment and a $45 million fully backstopped equity rights offering, resulting in approximately $80 million in net cash after transaction costs.

Additionally, second lien lenders converted $34 million in debt into shares of common stock. BNED also extended its $325 million loan facility with Bank of America, maturing in 2028, which will enhance financial flexibility and reduce annual interest expenses.

As part of these transactions, a new board of directors was appointed, including five new directors. BNED will also implement a 1-for-100 reverse stock split, effective June 11, to meet the NYSE’s minimum bid price requirement. This reverse split will reduce the number of outstanding shares from approximately 2.62 billion to 26.2 million.

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Should I Sell My BNED Stock?

Whether to sell or hold a stock largely depends on an investor's strategy and risk tolerance. Swing traders may sell an outperforming stock to lock in a capital gain, while long-term investors might ride out the turbulence in anticipation of further share price growth.

Similarly, traders willing to minimize losses may sell a stock that falls a certain percentage, while long-term investors may see this as an opportunity to buy more shares at a discounted price.

Shares of Barnes & Noble Education have lost 91.2% year to date. This compares to the average annual return of -75.86%, meaning the stock has underperformed its historical averages. Investors can compare a stock's movement to its historical performance to gauge whether this is a normal movement or a potential trading opportunity.

Investors may also consider market dynamics. The Relative Strength Index can be used to indicate whether a stock is overbought or oversold. Barnes & Noble Education stock currently has an RSI of 10.48, indicating oversold conditions.

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BNED has a 52-week high of $2.26 and a 52-week low of $0.10.