Leggett & Platt (NYSE: LEG) stock price plunged by more than 37% on Wednesday as the company lost its dividend king status. It crashed to a low of $11.5, its lowest level since  October 11th. It has plunged by over 76% from its highest level in 2021. $10,000 invested in the company during its peak would be about $2,200 today.

Leggett & Platt, a leading manufacturer of bedding components, home and work furniture products, and floor underlayment solutions, has lost its dividend king status.

The company, which has boosted its dividends for 52 years, announced that it would slash its dividend payments from $245 million to $135 million. In a statement, the CEO said:

That happened after the company’s sales dipped by about 10% during the quarter to $1.08 billion. Its EBITDA plunged by 28% to over $97 million during the quarter.

It now expects that its sales for the year will drop by about 8% to between $4.35 billion and $4.65 billion. This is a sharp decline considering that the company had over $4.7 billion in 2018. 

Legget & Platt’s business has come under intense pressure in the past few years, especially in its bedding division. In the first quarter, its bedding segment’s revenue dropped by 10% because of the soft US and European markets. 

The same trend is happening in the other segments. Specialized product revenue dropped by 1% while its furniture, flooring, and textile business dropped by 1% and 9%, respectively. 

LEG chart by TradingView

The weekly chart shows that the LEG share price has been in a strong sell-off after peaking at $50.15 in 2021. That sell-off intensified after the company decided to slash its dividend. It dropped below the important support level st $17.98, its lowest swing in March 2020 at the onset of the pandemic.

Leggett & Platt has constantly remained below the 50-day moving average while the Average Directional Index (ADX) has risen to over 40. That is a sign that the stock’s sell-off is gaining momentum. 

LEG stock’s Relative Strength Index (RSI) has dropped to the extreme oversold level, which is another sign that the bearish momentum is continuing. Therefore, the outlook for the stock is extremely bearish, with the next point to watch being the psychological level of $10.

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