ADT Inc. (ADT) shares are taking a hit on Monday, plummeting by 6.5% to $7.36 following the announcement of a proposed secondary public offering (SPO) of 56 million shares. This move comes alongside a concurrent 16 million share repurchase by selling shareholder Apollo Global Management.
The SPO, expected to close on October 30th, 2024, involves the sale of 56 million shares of ADT common stock held by entities affiliated with Apollo Global Management. Underwriters have the option to purchase an additional 8.4 million shares within a 30-day period. Importantly, ADT itself will not be selling shares or receiving any proceeds from this offering.
Simultaneously, ADT plans to repurchase 16 million shares from the underwriters at the same price they paid to the selling stockholders. This action is part of ADT’s existing $350 million share repurchase program. Notably, the underwriters will not receive any fees for these repurchased shares.
Barclays, Citigroup, and BTIG will manage the offering, facilitating the sale of shares in various markets.
This news has sparked questions about whether investors should sell their ADT stock. The decision to sell or hold largely depends on individual investment strategies and risk tolerance. Swing traders might opt to sell an outperforming stock to lock in gains, while long-term investors may hold onto the stock, anticipating further price growth. Similarly, traders seeking to minimize losses might sell if the stock falls a certain percentage, while long-term investors could see this as an opportunity to buy more shares at a discounted price.
It’s important to note that ADT shares have gained 29.09% year to date, exceeding the average annual return of 0.06%. This strong performance suggests the stock has outperformed its historical averages. Investors can compare a stock’s movement to its historical performance to determine whether it’s a normal fluctuation or a potential trading opportunity.
ADT’s 52-week high stands at $8.25, while its 52-week low sits at $5.53.
