Shares of wedding/lifestyle site The Knot plummeted 20 percent, or $4.68, over two days, closing at $16.32 on Friday afternoon after an analyst called the stock “overvalued” on Thursday.
Richard Fetyko, an analyst for Merriman Curhan Ford downgraded The Knot’s stock to “Neutral” from “Buy.” In a note to investors, he said the company’s $80 million acquisition of WeddingChannel.com, another wedding website, carried an M&A integration risk. Without financial information from WeddingChannel.com, it was difficult to predict what would happen after the acquisition closed, he said. The Knot already sold 2.75 million shares in a private placement last week, and he predicted it would need to sell 1.4 million more to complete the purchase.
In fact, the company filed its intention to sell about 8 million shares of common stock with the SEC on Thursday. The Knot will use the $62.8 million it expects to raise from a public offering of 3.5 million shares, priced at $19.26, to fund the acquisition. Stockholders will sell the remaining 4.45 million shares, for which The Knot will receive no proceeds.
Related: TheKnot To Acquire WeddingChannel For About $79 Million; Litigation Ends
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