What happened
Shareholders of Playtika Holding (PLTK +2.50%) endured significant losses on Monday as shares fell 15% by 3:15 p.m. ET, compared to a 2.6% plunge in the wider market. The drop pushed the mobile-gaming platform specialist further into negative territory, down nearly 50% in the past year.
Shares fell on news that a major shareholder is considering unloading much of its stock.
Image source: Getty Images.
So what
Playtika announced in a press release that Playtika Holding UK II, its largest shareholder, is exploring a potential sale of a portion of its stock. The sale, which would take place through several public and private transactions, might amount to between 15% and 25% of the entire outstanding shares for the company.
Executives didn't explain why the transaction was happening and didn't list the potential timing of the sales. Still, the prospect of so much selling by the largest shareholder pressured the stock price on Monday.
Now what
On the bright side, it's possible that the stock sales would push Playtika Holding UK II below the rate that currently qualifies it as a controlling shareholder. That shift might be good news for shareholders, since it would give them more influence over the growth stock's business. However, the stock is likely to see continued selling pressure thanks to the excess supply of outstanding shares on the market.
Those poor returns could be amplified by investor worries about Playtika's weak growth outlook. Watch for a major update to that outlook when the company announces its fourth-quarter operating results on March 1.
