What Happened?
Shares of government engineering solutions provider Amentum Holdings (NYSE: AMTM) fell 3.4% in the morning session after the company filed a prospectus for the potential sale of over 90 million shares by existing stockholders.
The government services contractor disclosed in its filing that selling stockholders may offer and sell up to 90,053,486 shares of common stock. The company also stated that it would not receive any money from these sales. This type of event can concern investors because a large sale by existing shareholders increases the supply of shares available for trading. It can also suggest that major holders were looking to reduce their positions, which can lead to a drop in the stock price.
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 Amentum? Access our full analysis report here, it’s free.
What Is The Market Telling Us
Amentum’s shares are extremely volatile and have had 31 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 2 months ago when the stock dropped 3.3% after a surprisingly weak U.S. jobs report was released, fueling concerns about a slowing economy.
The U.S. economy added only 73,000 jobs, falling significantly short of economists' expectations, while figures for May and June were revised down, erasing 258,000 previously reported jobs. The professional and business services industry itself shed 14,000 jobs. This data points to a cooling labor market, fueling concerns of a slowing economy. A weaker economic outlook often leads to reduced corporate spending on key services like IT consulting and professional staffing, which directly impacts the sector's revenue and growth prospects. The report immediately increased investor expectations of an interest rate cut by the Federal Reserve.
Amentum is up 12.6% since the beginning of the year, but at $24.38 per share, it is still trading 27% below its 52-week high of $33.40 from November 2024. Investors who bought $1,000 worth of Amentum’s shares at the IPO in September 2024 would now be looking at an investment worth $826.16.
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