Why The Cheesecake Factory Stock Dropped Today
Casual dining restaurant chain The Cheesecake Factory (NASDAQ: CAKE) is raising $475 million, but it's not going toward growing or operating the business. Rather, the company will use the money to simplify its stock structure. That's a lot of cash with little perceived benefit to common shareholders, which is why the stock was down 10% as of 11:45 a.m. EDT.
Prior to today's drop, The Cheesecake Factory stock was trading near its all-time high, so it's a little hard to criticize management for taking advantage of its high stock price to raise cash. The company is looking to raise $175 million from selling new shares to the public. The other $300 million will come from offering convertible senior notes that will be due in 2026.
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Source Fool.com
