Barnes & Noble Education, Inc. (BNED) shares rose about 5% during Monday's session after the company announced a partnership with Fanatics and Lids.

Key Takeaways

  • Barnes & Noble Education shares moved higher during Monday's session after the company partnered with Fanatics and Lids.
  • The move will provide $15 million via a strategic equity investment and comes after the company reported better-than-expected second quarter financial results.
  • The stock attempted to break out from trendline resistance during Monday's session but could see near-term consolidation.

Under the terms of the deal, Fanatics and Lids will jointly make a $15 million strategic equity investment in the company in exchange for 2,307,692 shares of common stock at $6.50 per share. Barnes & Noble Education will use the proceeds to bolster its strategic growth initiatives and bring Fanatics and Lids products to hundreds of universities across the country.

The move comes shortly after Barnes & Noble Education reported better-than-expected second quarter financial results. Revenue fell 22.9% to $595.5 million, beating consensus estimates by $72.91 million, while earnings per share (EPS) came in at 15 cents. 

Chart showing the share price performance of Barnes & Noble Education, Inc. (BNED)
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From a technical standpoint, the stock attempted to break out from trendline resistance during Monday's session. The relative strength index (RSI) rose to overbought levels with a reading of 71.06, but the moving average convergence divergence (MACD) experienced a bullish crossover. These indicators suggest that the stock could see some near-term consolidation before resuming its intermediate-term trend higher.

Overbought is a term used when a security is believed to be trading at a level above its intrinsic or fair value. Overbought generally describes recent or short-term movement in the price of the security, and it reflects an expectation that the market will correct the price in the near future.

Traders should watch for consolidation within the stock's price channel over the coming sessions. If the stock breaks out, traders could see a move toward prior highs of $5.10. If the stock breaks down, traders could see a move toward trendline resistance at $4.00 or the 50-day moving average at $3.16.

The Bottom Line

Barnes & Noble Education shares moved higher after the company partnered with Fanatics and Lids. After the RSI moved into overbought territory, the stock could see some near-term consolidation, but the MACD's bullish crossover suggests that the intermediate-term outlook remains bullish.

The author holds no position in the stock(s) mentioned expect through passively managed index funds.