Callaway and Topgolf are separating into the two areas they originally specialized in
Topgolf Callaway Brands Corp (NYSE:MODG) is down 1% to trade at $10.65, but earlier was higher, after the entertainment and retail company announced it will split into two separate businesses. Callaway will focus on golf equipment and consumers' active lifestyle while Topgolf will take on the golf entertainment unit. If this sounds familiar at all, its because the two entities focused on these exact separate areas of business before their merger in March 2021.
MODG is finally getting some separation from its 10-month low of $9.90 on Aug. 30. The equity is still down 22.6% in 2024, and 36% year-over-year, but has added 10.6% over the last week.
Short-term options traders have been bearish. This is per Topgolf Callaway stock's Schaeffer's put/call open interest ratio (SOIR) of 0.87 that stands higher than 76% of readings from the past 12 months.
It will be interesting to see if analysts respond favorably to MODG's slice, since eight of the 13 in coverage maintain "hold" or worse ratings. Plus, a healthy 13.5% of the stock's total available float is sold short. While shorts are hardly underwater now, continued outperformance could force some covering.