Shares of online-loans facilitator LendingTree (NASDAQ:TREE) closed down 10.6% on Tuesday after the company announced that its largest shareholder, a subsidiary of GCI Liberty, plans to sell all of its shares of LendingTree at a price well below where LendingTree stock closed on Monday. GCI plans to sell just under 3 million shares of common stock at an offer price of $295 per share.
GCI simultaneously plans to sell 488,005 more shares in a private placement bought by the Royal Bank of Canada (RBC) at a price not specified in the announcement.
In short, GCI is selling off just under 3.5 million shares of stock. This is nearly 27% of all LendingTree shares in existence and also every single share that GCI currently owns. The company will probably receive about $1 billion in proceeds from the sale -- assuming the private placement takes place at the same price as the public sale -- but LendingTree will receive... nothing.
This isn't a big vote of confidence in LendingTree's future, and investors aren't interpreting it as one. With LendingTree now down 11% over the past year, while the rest of the S&P 500 is up 16%, the stock has underperformed "the market" by a combined 27 percentage points over the past 52 weeks. It seems that GCI has now finally had enough of this underperformance and is throwing in the towel.
And judging from the price action on Wall Street today, it seems many other LendingTree shareholders are feeling the same way.