Shares of Trade Desk Inc (NASDAQ:TTD) were moving higher Tuesday after the ad-buying specialist priced a secondary offering. As of 3:14 p.m. EST, the stock was up 13.9%.
Trade Desk priced the secondary offering of 6,331,991 shares at $35.50, below Monday's closing price at $36.81, but it will not receive any proceeds from the offer as it is meant to give "certain selling stockholders" the opportunity to cash out.
That also means there were be no dilution to current shareholders from the sale. Tuesday's pop seemed to come from short-term arbitrage buyers taking advantage of the discrepancy as Tuesday's volume of shares exchanged was more than 10 times the average amount. Buyers seemed to be in a rush to take advantage of the run-up in the share price, making day trades.
Secondary offerings generally push share prices down rather than up as the market tends to interpret the bulk selling as a weak sign for the stock, even when shares aren't actually getting diluted in this case. Shares slipped 3% when the offering was first announced last week, but the Tuesday's spike in Trade Desk shares may just be a result in the underpricing of the offering, which comes just a few months after its IPO last September.
The company, which helps businesses manage their digital marketing strategy, should be in a solid position to take advantage of growing trends in online advertising, but Tuesday's move seems to be detached from any fundamentals with the company. Tuesday's news affect your investing thesis one way or another.