Walgreens Boots Alliance (WBA) Shares Dive 17% as Dividend Suspension Shocks Investors
Shares of Walgreens Boots Alliance (NASDAQ: WBA) plummeted by 17% in premarket trading following the announcement of its first dividend suspension in over 90 years. This move is part of a turnaround strategy aimed at bolstering the company's financial health through debt reduction and improved cash flow.
While a dividend cut was anticipated, a complete suspension surprised investors given WBA's longstanding dividend policy. However, the path to positive cash flow in fiscal 2025 remains uncertain due to store optimization costs, looming debt maturities, and limited growth prospects.
The market reaction to this news highlights the volatility of WBA's stock, which has experienced 19 moves exceeding 5%. The previous significant drop of 12.3% occurred ten days ago due to allegations of unlawful opioid prescriptions.
Despite recent gains, WBA remains significantly below its 52-week high of $23.25 reached in January 2024, currently trading at $10.48 per share. Investors who invested $1,000 in WBA five years ago would have seen their investment decline to $206.10.
In light of WBA's surplus cash, share buybacks could be a viable strategy if the price is right.