What Happened?
Shares of fresh produce company Dole (NYSE: DOLE) fell 9% in the morning session after the company announced the pricing of a secondary offering of ordinary shares by existing shareholders.
The offering consists of nearly 12 million shares being sold by two entities, Castle & Cooke Holdings, Inc. and The Murdock Group, LLC, at a public price of $13.25 per share. Dole specified that the company itself is not selling any shares in the offering and will not receive any of the proceeds. Secondary offerings can put downward pressure on a stock's price by increasing the supply of shares available for public trading. Such a sale by major shareholders can also be perceived negatively by the market, raising concerns about the sellers' confidence in the company's near-term outlook.
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 Dole? Access our full analysis report here, it’s free.
What Is The Market Telling Us
Dole’s shares are not very volatile and have only had 3 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 13 days ago when the stock gained 3.2% on the news that the major indices rebounded, as Fed Chair Jerome Powell delivered dovish remarks at the much-awaited Jackson Hole symposium. Powell suggested that with inflation risks moderating and unemployment remaining low, the Federal Reserve might consider a shift in its monetary policy stance, including potential interest rate cuts. This outlook eased market concerns about prolonged high interest rates and their impact on economic growth. The prospect of lower borrowing costs bolstered investor confidence, particularly in sectors that have lagged, leading to a broad rally across the market.
Dole is down 1.4% since the beginning of the year, and at $13.35 per share, it is trading 22.1% below its 52-week high of $17.12 from September 2024. Investors who bought $1,000 worth of Dole’s shares at the IPO in July 2021 would now be looking at an investment worth $920.34.
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