Why Did Karat Packaging Plunge 10.08% on Secondary Offering?

On June 11, 2025, Karat Packaging's stock price plummeted by 10.08% in pre-market trading, sparking concerns among investors about the company's recent financial moves.

Karat Packaging has recently announced a secondary offering of 1.5 million shares of its common stock. This move, initiated by the company's management team, has raised questions about the potential impact on the company's stock price and overall market perception.

The underwriters involved in the offering have been granted a 30-day option to purchase up to an additional 225,000 shares of Karat's common stock from the selling stockholders. This provision could further dilute the existing shareholders' stakes, adding to the market's unease.

The secondary offering is seen as a strategic move to provide liquidity for the selling stockholders, but it has also raised concerns about the company's financial health and future prospects. Investors are closely monitoring the situation to gauge the long-term implications of this offering on Karat Packaging's stock performance.