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Why Shares of StepStone Group Fell Today

By Bram Berkowitz – Nov 16, 2021 at 4:35PM

Key Points

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The company announced a secondary offering of common stock.

What happened

Shares of the investment solutions and advisory firm StepStone Group (STEP 3.89%) fell more than 10% today after the company announced a secondary offering of common stock.

So what

Certain StepStone shareholders intend to sell 4.5 million shares of class A common stock into the market. Offerings like these tend to send the stock downward as lots of shares just flooded the market.

Red squiggly line moving downward.

Image source: Getty Images.

But last week, for the second fiscal quarter of 2022 ending Sept. 30, StepStone reported $1.45 diluted earnings per share on total revenue of nearly $282 million. Both numbers are up significantly from the same period last year. Total assets under management and advisement reached $519 billion, up from $427 billion in the sequential quarter.

Additionally, StepStone announced that it plans to more than double its quarterly dividend to $0.15 per class A common stock.

Now what

Although investors never love to see secondary offerings, StepStone has bounced back nicely from last year and has also grown assets under management and advisement nicely this year, so I wouldn't worry too much about the secondary offering. It may take some time for the market to absorb the shares, but overall the business looks healthy.

Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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