What Happened?
Shares of security technology and services company ADT (NYSE: ADT) fell 6.2% in the morning session after it reported third-quarter results that were overshadowed by a full-year financial outlook that fell short of expectations. While revenue for the quarter grew 4.4% year-over-year to $1.30 billion, aligning with forecasts, and its adjusted earnings per share of $0.23 surpassed estimates, investors focused on the weaker guidance. ADT's full-year revenue forecast, with a midpoint of $5.13 billion, came in below what analysts had predicted. This disappointing outlook signaled expectations for slower future growth, overshadowing the positive aspects of the quarterly report, including a significant year-over-year increase in free cash flow.
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What Is The Market Telling Us
ADT’s shares are not very volatile and have only had 3 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 3 months ago when the stock dropped 3.2% on the news that the company announced the pricing of a secondary public offering of 71 million shares held by affiliates of major stockholder Apollo Global Management. This move increased the supply of ADT shares available on the market, which often puts downward pressure on a stock's price. The shares were sold by the Apollo-affiliated entities, meaning ADT itself did not issue new stock or receive any proceeds from the sale. To help offset some of the impact, ADT also authorized the repurchase of approximately 11 million shares from the offering's underwriters as part of its existing buyback program. The underwriters also had a 30-day option to purchase up to an additional 10.65 million shares from the selling stockholders.
ADT is up 17.6% since the beginning of the year, and at $8.21 per share, it is trading close to its 52-week high of $8.85 from September 2025. Investors who bought $1,000 worth of ADT’s shares 5 years ago would now be looking at an investment worth $1,188.
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