Why KinderCare Learning Stock Rocketed 17% Higher on Thursday
Key Points
CEO John T. "Tom" Wyatt opened his wallet to purchase over 494,000 shares.
That followed last week's fourth-quarter and full-year earnings release from the company.
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The stock of early stage educational and supervision services provider KinderCare Learning Companies (NYSE: KLC) experienced a heck of a growth spurt on Thursday. On the back of a large-scale insider stock buy, investors pounced on the stock, pushing it to a more than 17% gain that trading session.
Caring is buying
After market close on Wednesday, KinderCare divulged in a regulatory filing that CEO John T. "Tom" Wyatt purchased 494,118 shares of the company's common stock. This position was accumulated over two successive trading days, specifically Tuesday and Wednesday of this week.
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Additionally, on Monday, Wyatt was granted 1,180,555 stock options at a strike price of $1.84. On top of that, he received restricted stock units from the company equating to 472,222 common shares. This also occurred on Monday.
Neither Wyatt nor KinderCare has officially commented on the CEO's actions.
Morale booster
Regardless, the CEO's considerable buy-in is -- at least outwardly -- a sign of confidence in KinderCare's business. This feels necessary because the company's stock was hit with an aggressive sell-off following its fourth-quarter results release last Thursday; although it beat on both the top and bottom lines for the period, its full-year revenue guidance was seen as fairly weak.
I think it's unwise to trade purely on the basis of insider buying or selling, even though such events can really move a stock. What matters more is fundamental performance; what I'm seeing is a company experiencing only modest top-line growth and erratic bottom-line results. Personally, I'd keep my distance from the stock for now.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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