On May 3, shares of data storage company Western Digital Corporation (NASDAQ: WDC) surged 14.47 percent to $61.72. The cause for this was an activist investor’s suggestion that the firm is divided up.
Elliott Investment Management (which has a 6% investment in Western Digital) has written to Western Digital’s board of directors, requesting a strategic assessment of the company’s operations. Western Digital’s financial performance is trailing behind competitors, according to the activist investor, since the corporation needs to manage two different companies.
According to Elliott analysts, the split will result in two firms with increased shareholder value. Furthermore, if a split is announced, WDC shares might increase by more than 60%, reaching $100 or higher by the end of 2023.
Western Digital’s board of directors has stated that they will evaluate this idea. Elliott Investment’s proposal carries weight with the board because the investment firm not only bought $1 billion in WDC shares but also pledged to spend another $1 billion in the company’s flash memory division.
Western Digital is now working in two directions. The first is the manufacture of hard disc drives (HDDs), which are extensively utilized to store massive quantities of data in personal computers and servers. The development of flash drives (SSD) and NAND flash memory, which are often utilized for resource-intensive applications requiring high data processing speed, is the second path.
Smartphones utilize NAND as well. Both companies operate in high-demand areas, yet the new flash memory has a greater sales potential.
WDC stock gained by 24.49 percent in the past week and by 27.55 percent in the last month. During the previous quarter, the shares of this firm increased by 17.41%. WDC stock has risen 13.92 percent in the previous six months, with a full-year loss of -8.26 percent. This stock’s year-to-date (YTD) price performance is presently negative at -5.35 percent as of this writing.