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Today we are watching…
1. Office Depotย (#odp)
If you check out the Office Depot stock chart, what you see is not a computer glitch. Itโs called a reverse stock split. Iโm sorry to say if you were holding the stock, you didnโt make an 800% return overnight. Depot merged shares so that ten $2 stocks could become one $20 stock. Your shares on Fantasy Finance will have automatically swapped, all in proportion so that the value of your stake and the valuation of the company didnโt change one iota. Itโs just a corporate action intended to stave off delisting from the stock exchange, which can happen if a stock trades for sub-a dollar. Of course, the event didnโt stop pre-market traders from getting confused, but hey, thatโs efficient markets for you!ย ย
2. Wendy’s (#wen)
The largest franchisee of Wendyโs and Pizza Hut stores has declared bankruptcy, NPC International. The fate of its fast foods joints hang in the balance. NPC International was struggling pre-covid with a big debt burden and falling sales. This will be a routine Chapter 11 bankruptcy where the debt is restructured, so shareholders are confident that Wendyโs outlets will exist going forward, but are concerned about how many there will be. NPC is the franchisee for other brands like Pizza Hut. Watch this space. We might start seeing franchisers go down next when the dominos start falling.