Shares of ADT Inc. (NYSE: ADT) plunged over 10% in pre-market trading on October 28, 2024, after the security solutions provider announced a proposed secondary public offering of 56 million shares by entities affiliated with Apollo Global Management, a major shareholder.

According to the company's announcement, the underwriters have a 30-day option to purchase an additional 8.4 million shares from the selling stockholders. ADT itself is not selling any shares in this offering and will not receive any proceeds. However, the company has authorized a concurrent share repurchase of 16 million shares from the underwriters, as part of its existing $350 million share buyback program.

Secondary stock offerings by major shareholders are typically seen as an overhang on the stock, as it increases the supply of shares available for trading. While ADT's share repurchase helps mitigate this impact to some extent, the net effect is still an increase in the company's outstanding share count. Investors appear to be pricing in potential dilution and selling pressure on the stock in the near term.

ADT's management will be closely watched for further updates on the company's strategy and outlook, as it navigates this equity transaction and continues its transition from a pure security services provider to a smart home solutions company.