What Happened?
Shares of women’s plus-size apparel retailer Torrid Holdings (NYSE: CURV) fell 36.4% in the morning session after the company announced a public offering of 10 million shares of its common stock by selling stockholders. The offering was priced at $3.50 per share, and the company itself will not receive any proceeds from the sale.
This type of secondary offering can concern investors as it increases the number of shares available for trade, potentially diluting the value of existing shares, and can signal that major investors are looking to sell their positions.
Separately, Torrid has agreed to buy back $20 million of its stock from one of the selling stockholders, Sycamore Partners, at the same offering price. However, this repurchase was not enough to offset the negative sentiment from the large secondary offering, leading to a significant sell-off in the stock.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Torrid? Access our full analysis report here, it’s free.
What The Market Is Telling Us
Torrid’s shares are extremely volatile and have had 57 moves greater than 5% over the last year. But moves this big are rare even for Torrid and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 7 months ago when the stock dropped 33.9% on the news that the company reported weak third-quarter results, which missed analysts' revenue and EBITDA expectations. Its full-year revenue and EBITDA guidance also fell short of Wall Street's estimates. The company observed soft sales trends in late September, which continued through October. Macroeconomic pressures, such as constrained consumer spending and adverse weather events, also created a difficult operating environment.
Looking ahead, management emphasizes the need for more innovative and diversified product strategies to adapt to shifting consumer preferences. Overall, this was a weaker quarter.
Torrid is down 39.2% since the beginning of the year, and at $3.21 per share, it is trading 64.1% below its 52-week high of $8.95 from July 2024. Investors who bought $1,000 worth of Torrid’s shares at the IPO in June 2021 would now be looking at an investment worth $132.99.
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