Why Barnes & Noble Stock Skyrocketed 23% Today

MarketsMotley Fool

What happened

Shares of Barnes & Noble (NYSE: BKS) were up 22.7% as of 2:45 p.m. EDT Thursday after The Wall Street Journal reported the bookseller is close to a deal to be acquired in a go-private transaction by hedge fund Elliott Management.

Continue Reading Below

Citing "people familiar with the matter," the Journal says Elliott is the "lead bidder in an auction that could come to a head soon" -- though it also cautioned the terms were unclear and a deal is not guaranteed. For perspective, following this afternoon's pop, Barnes & Noble has a market capitalization of roughly $420 million.

So what

The deal would conclude a formal review of strategic alternatives launched by Barnes & Noble last October, when it noted "multiple" potential acquirers had expressed interest, including company chairman Leonard Riggio.

Still, shares were down around 25% so far in 2019 as of this morning, most recently hurt in March as Barnes & Noble reported flat holiday-quarter revenue and reduced its full-year earnings outlook -- and this despite achieving a 1.1% increase in comparable-store sales, which management said represented their "best quarterly performance in several years."

Now what

I'd be remiss if I didn't reiterate that investors would do best to focus first on the underlying health of Barnes & Noble's business. Again, there are no guarantees that the aforementioned auction will yield a palatable deal for shareholders, which is why Barnes & Noble stock still trades modestly below where it stood shortly after announcing its strategic review late last year.

But given renewed hope for a juicy acquisition premium, it's also no surprise to see Barnes & Noble up big today.

10 stocks we like better than Barnes & NobleWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Barnes & Noble wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of March 1, 2019

Steve Symington has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.