What happened
Shares of the insurance platform SelectQuote (SLQT -3.61%) 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.
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.
