What happened

Shares of PLBY Group (PLBY -0.67%), which bills itself as a "pleasure and leisure" company (though it is probably best known as the owner of the Playboy brand), dropped as much as 14% in early trading on Tuesday. As of 12:47. p.m. EDT, that loss had been pared to around 10.3%, but the mood here is clearly negative.

So what

The easy answer to the question of what drove the stock's decline is that investors have soured on technology-related names of late. While PLBY Group might not, at first, sound like a technology stock, it made a big splash earlier this year when it announced plans to jump into the non-fungible token (NFT) space by partnering with artists who would use its massive content catalog to create NFTs for public sale. That helped push the stock materially higher. In fact, even after Tuesday morning's drop, the shares are up some 250% since PLBY came public in February via a blank check company.

Against that backdrop, it's not as shocking to find that the mood shift around technology names might be dragging on PLBY Group.  

A soap bubble with a dollar sign in it about to be popped by a hand holding a pin.

Image source: Getty Images.

But there's more going on here. The special purpose acquisition company that was used to take PLBY Group public carries the unusual traits common to SPACs. It just sent an updated prospectus to the SEC revealing that insiders may sell roughly 21.9 million shares of PLBY Group with none of the proceeds going to the company. This isn't really new information and it's common to see with SPACs, but in combination with the massive price gains the stock has delivered in such a short period of time, it paints a less than desirable picture. Put simply, PLBY Group's stock has risen and insiders are looking to take advantage by, potentially, selling out in a big way. That could dilute other shareholders, which is rarely seen as a positive. It's a big overhang, especially when the broader market is in a dour mood.   

Now what

PLBY Group is an interesting company, but the stock has moved dramatically higher in just a few months. And because it joined the public markets in mid-February, it won't report earnings for its first full quarter as a public company until its second-quarter earnings release. Given that lack of solid numbers to analyze, the main things moving this stock right now are investors' emotions. As such, long-term investors should probably wait for the company to deliver more financial results before they step in here.