Depending on your quote provider, shares of AT&T (NYSE:T) may have been trading lower by $4.52 or higher by roughly $1.38 at $19.60 Monday.
The reason for the disparity in price makes AT&T the PreMarket Prep Stock of the Day.
The Spin-Off: After an announcement last year, AT&T has finally spun off its holdings in Warner Bros. and Discovery Inc. (NASDAQ:WBD), which began trading last week, ending its inaugural session at $25.50.
The issue has backed off that close and is trading down 2.51% at $23.86 Monday afternoon.
What Do A&T Shareholders Get? Shareholders of AT&T received just under 0.242 shares of WBD for each share of AT&T common stock they held at the close. As a result, AT&T shareholders received 1.7 billion shares of WBD, representing 71% of WBD shares on a fully diluted basis. Discovery's existing shareholders own the remainder of the new company.
- Friday’s closing price of WBD of $24.47 times 0.242 equals $5.92.
- AT&T's closing price on Friday was $24.14.
- The adjusted price for Monday’s session is $24.14-$5.92 = $18.22
PreMarket Prep's Take: The issue was discussed on Monday’s show from a fundamental and technical point of view.
Co-host Dennis Dick, who has been bearish on AT&T for years, was not changing his stance on the issue.
“Why do you want to own this? Everyone has been cutting the cord and going to streaming,” he said.
“Now they are spinning off the good stuff and now you are stuck with the legacy business.”
The author of this article made a bullish call on the issue based on Friday’s price action. Based on the former chart, the issue has been struggling to clear and hold $24. In Friday’s session, the issue cleared that level, peaking at $24.24, and ended the session at $24.14 on higher than average volume.
Dick, who was viewing the issue on an adjusted price basis, acknowledged the technical breakout.
The discussion of the issue from Monday’s show can be found here:
T Price Action: Investors are flocking to shares of AT&T. Perhaps the reason for that is the record date (the day an investor must own shares of the company to be eligible for a dividend payout) is April 14.
Although the payout has been sharply reduced, shorter-term players in the issue are attempting to purchase the issue at a discounted price, capture the dividend and exit the issue at a loss less than the dividend amount captured.
After a much higher opening ($18.89 vs. $18.22), the issue retreated only a few pennies and rallied well into the $19 handle. As of noon, it has reached $19.74 and backed off to the $19.60 area.
