AMMO stock tumbles after plan to separate into 2 publicly traded companies

Shares of AMMO Inc.
POWW,
-13.80%
tumbled 10.1% in morning trading Monday, after the online guns seller announced a plan to separate into two publicly traded companies, one that includes its firearms marketplace and the other that includes its ammunition and components business. The stock’s selloff comes a day after it closed at an eight-month high, which followed a 62.5% rocket ride in three months. Following the separation, the Outdoor Online Inc. company will be comprised of GunBroker.com and its related online business, and will be run by current AMMO Chief Executive Fred Wagenhals, while the Action Outdoor Sports Inc. (AOS) business will retain the current ammunition and munition components business, which includes the Streak, Signature and Blackline brands. Who will lead AOS will be announced later. AMMO said the reasons for the planned separation include providing distinct investment opportunities to allow for more appropriate valuation of the businesses, to allow each business to better focus capital allocation strategies and to enhance the strength of each business’ brand. The stock has slipped 1.4% year to date, while the S&P 500
SPX,
+0.34%
has declined 10.4%.