PSEC Shares Plunge 0.77% Intraday to Record Low on Governance Struggles and Strategic Delays

Prospect Capital Corporation (PSEC) closed flat on Tuesday, with its share price hitting a record low amid an intraday decline of 0.77%. The move reflects persistent investor concerns tied to governance challenges and strategic uncertainty.

The company’s internal dynamics have drawn scrutiny, particularly under CEO John Barry. Reports highlight a toxic corporate culture marked by alleged leadership misconduct, including public beratement of employees and external partners. These practices have strained relationships with valuation firms and eroded employee morale, raising questions about operational stability and transparency.

Financial pressures have compounded the issue. A 25% dividend cut in 2024 signaled deteriorating earnings and asset values, while a downgrade of its borrowings to junk status increased liquidity risks. Reliance on non-cash payment-in-kind (PIK) interest has also weakened, with income dropping by nearly half in key quarters. Elevated management fees, higher than industry benchmarks, further strain investor confidence.

Strategic shifts toward middle-market lending have yet to yield results. The company’s plan to divest from commercial real estate and CLOs remains incomplete, leaving uncertainty about its ability to stabilize net asset value or sustain dividend reductions. Analysts remain skeptical about the pace and effectiveness of this repositioning, which some view as a prelude to a potential sale rather than a long-term solution.

Market sentiment remains bearish. Negative media coverage emphasizing governance flaws and defensive PR efforts have deepened perceptions of instability. While peers in the BDC sector face similar challenges, PSEC’s unique management controversies and slow strategic execution have amplified its stock’s volatility. Until governance improvements and financial clarity emerge, the stock is likely to remain under pressure.