Shares in ADT (ADT) were down nearly 12% in premarket trading Thursday morning after the home security company announced a secondary public offering of its stock.

Under the terms of the ADT secondary offering, 65 million shares of the company’s common stock held by entities managed by affiliates of Apollo Global Management (APO) will be priced to the public at $6.50 per share, representing a 13% discount to Wednesday’s $7.47 closing price. The company expects the offering to close on March 11.

In addition, the managing underwriters—who include Morgan Stanley (MS), Barclays (BCS), Apollo Global Securities, and RBC Capital Markets—have a 30-day option to purchase up to an additional 9.75 million shares of ADT’s common stock from the selling shareholders.

ADT said that it will not receive any proceeds from the offering and has agreed to purchase 15 million shares from the underwriters as part of its $350 million stock buyback program, most likely a move aimed at countering the dilution of its shares. The secondary offering comes roughly a week after the company missed Wall Street’s 2024 revenue forecast amid softness in its solar business.

The ADT share price recently broke above a period of nine-month sideways drift on above-average volume. Moreover, the 50-day moving average crossed back above the 200-day moving average in early January to create a golden cross – a chart signal that often marks the start of a new uptrend. 

However, with news-driven selling looking likely in the short-term, keep an eye on if the stock finds support from a key 12-month horizontal line that sits in close proximity to the 50-day moving average around $6.80.

ADT shares were down 11.9% at $6.58 about three hours before Thursday's opening bell.

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As of the date this article was written, the author does not own any of the above securities.