Dell Technologies (NYSE: DELL) decision to outsource its cloud software subsidiary VMware (NYSE: VMW) was well received by the market and the announcement sparked a stock rally. In addition to improving their ratings, the spin-off is intended to give the companies access to new credit and improve their financial position. It will also create additional value for shareholders and offer new investment opportunities.
Like its parent company, VMware will benefit from the independent and simplified capital structure after the separation. Eligibility for inclusion in the leading stock indices would improve the company’s future prospects. After a brief pullback in early 2021, VMware shares have done well so far. And it seems that after their recent gains, they don’t have much room for growth in the near future. The adoption of a waiting strategy would therefore bring better opportunities in the future. In short, the time to invest in VMware may not be the right time.