Please ensure Javascript is enabled for purposes of website accessibility

Why Shares of SelectQuote Plunged Today

By Bram Berkowitz - Mar 2, 2021 at 4:25PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The company announced a proposed secondary offering of stock by existing shareholders, including a private equity firm.

What happened

Shares of the insurance platform SelectQuote (SLQT 2.68%) dropped by more than 11% today after the company announced a proposed secondary offering of common stock.

So what

SelectQuote is a platform that assists consumers in purchasing senior health, life, auto, and home insurance policies from a curated panel of the nation's leading insurance carriers.

The company announced after Monday's market close a secondary public offering of 10.6 million shares of common stock by existing stockholders, including the private equity firm Brookside Equity Partners.

Picture of SelectQuote building with employees outside.

SelectQuote's staff gather outside its headquarters. Image source: SelectQuote.

While the offering will not change the number of existing shares, it will increase the float, which refers to the amount of shares available to be publicly traded. That in turn creates a bigger supply of shares available.

Now what

Seeing major stockholders sell shares may spook some investors. After all, the company has largely been in recovery mode from the pandemic.

But SelectQuote stock recently hit an all-time high after going public in May of 2020. Additionally, profits are growing, and the company recently raised its guidance for full-year earnings in fiscal year 2021, which are expected to surpass 2020 earnings significantly.

Today's dip is likely associated with the short-term volatility that typically comes with a secondary offering, and presents a good opportunity to buy the stock.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

SelectQuote, Inc. Stock Quote
SelectQuote, Inc.
$3.07 (2.68%) $0.08

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/27/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.