What happened

Shares of Portillo's (PTLO 3.15%) plunged on Tuesday, with the stock falling as much as 10% early in the session. As of 1:37 p.m. ET, the stock was still down 8.5%.

That catalyst the crushed the fast-casual restaurant stock was the announcement of a secondary stock offering -- but the devil's in the details, and it really isn't what investors think.

So what

Portillo's announced a secondary offering of 8 million shares of its Class A common stock, which is expected to raise roughly $183 million. Underwriters also have the option to purchase up to 1.2 million additional shares within 30 days. 

However, this is a significant departure from a traditional secondary offering. In most cases, the number of existing shares increases, the proceeds are used for "general corporate purposes," and existing investors are diluted -- which is not the case here.

Portillo's will not receive any of the proceeds from this offering and plans to use the proceeds of the sale of Class A shares to purchase an equivalent number of Class B shares, a matter management addressed in a regulatory filing:

Upon close of the transaction, the total number of shares of the company's Class A common stock and the company's Class B common stock will remain the same; however, the amount of shares of Class A common stock will increase by the same amount of the decrease in the number of shares of Class B common stock. 

Essentially, the company is swapping Class A shares for Class B shares and cashing out some early investors, an event which won't be dilutive to current shareholders.

Now what

Like many stocks, Portillo's has been punished by the bear market, losing 58% of its value since late last year. As a result, the stock has fallen into bargain-basement territory, selling for roughly 1.5 times sales. For context, a reasonable price-to-sales ratio is between 1 and 2, so Portillo's stock is cheap.

Furthermore, with some of the best unit-level economics of any restaurant chain and strong financial results, investors would do well to pick up shares of Portillo's at a discount -- before the market comes to its senses.