What Happened?
Shares of restaurant technology platform Toast (NYSE: TOST) fell 4.5% in the afternoon session after a stockholder filed a notice of intent to sell 66,390 Class A shares.
The filing, made under Rule 144 by stockholder Jonathan Vassil, indicated a planned sale with an approximate market value of $2.38 million. Such filings are required when corporate insiders or major shareholders intend to sell a large block of stock. This type of news can make investors uneasy as a large sale could suggest a lack of confidence from a key stakeholder. Additionally, a large number of shares hitting the market at once can put downward pressure on the stock's price, and the market's reaction reflected this concern.
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 Toast? Access our full analysis report here.
What Is The Market Telling Us
Toast’s shares are quite volatile and have had 19 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 previous big move we wrote about was 15 days ago when the stock gained 2.9% on the news that cooler-than-expected inflation data reignited hopes for Federal Reserve interest rate cuts.
The November Consumer Price Index (CPI), a key measure of inflation, rose 2.7% year-over-year, coming in below economists' expectations of a 3.1% increase. Similarly, "core" inflation, which excludes volatile food and energy prices, rose 2.6%, beating the consensus forecast of 3.0%. This encouraging report meant that inflationary pressures were easing more quickly than anticipated. As a result, investors grew more optimistic that the Federal Reserve would have the flexibility to cut interest rates in the near future. Lower interest rates generally reduce borrowing costs for companies and can make stocks, particularly growth-oriented tech shares, more attractive to investors.
Investors who bought $1,000 worth of Toast’s shares at the IPO in September 2021 would now be looking at an investment worth $542.30.
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