Shares of Hydrofarm Holdings (NASDAQ: HYFM) , a maker of hydroponic plant growing supplies and equipment, dropped by as much as 15% on April 27. That's not shocking, given the pair of news releases the company issued after the close on April 26. Here's a quick look at what put investors in a selling mood.
First, some good news. When Hydrofarm eventually reports first-quarter earnings, the top line is projected to expand by 65%, with net income going from a loss to a profit. The only problem is that this news came in the same release as the announcement that Hydrofarm will be acquiring Field 16, a maker of plant nutrition products. Although Hydrofarm expects the transaction to be accretive to earnings in 2021, investors often sell the shares of companies that are buying others because of the cost of such transactions. In this case, Hydrofarm is paying up to $78.1 million, including an earnout payment of as much as $2.5 million.
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Why Hydrofarm Stock Fell as Much as 15% Today