On March 11th, Advance Auto Parts, Inc. (NYSE: AAP) announced that it was suspending its quarterly dividend and that it would be selling $1 billion in debt. The company also said it would be withdrawing its guidance for the 2020 fiscal year due to the outbreak of the coronavirus. Shares of Advance Auto Parts fell by over 12% on this news.
There are a few reasons why Advance Auto Parts stock is dropping. First, the company is suspending its dividend, which will likely save them around $150 million per year. This is a significant amount of money, and investors are worried about the company’s ability to continue to generate cash flow and profits without this income stream.
Second, the company is selling $1 billion in debt, which is another sign that investors are worried about the company’s financial health. And finally, the company is withdrawing its guidance for the 2020 fiscal year due to the outbreak of the coronavirus. This is a sign that the company is expecting a significant impact from the virus, and investors are worried about how long it will last and how much damage it will do to the company’s business.
Overall, there are a few reasons why Advance Auto Parts stock is dropping. The company is suspending its dividend, selling $1 billion in debt, and withdrawing its guidance for the 2020 fiscal year. These are all signs that investors are worried about the company’s financial health and its ability to weather the storm of the coronavirus outbreak.
