In what looks like a major case of buying on the rumor and selling on the news, shares of Global Sports (Nasdaq: GSPT), which manufactures Ryka athletic shoes, were thrashed on Monday after the company unveiled its new e-commerce division. Shares of Global Sports fell more than 37 percent, closing down 12-3/8 to 20-3/4. This is after the stock climbed $7 on Friday after the company announced that it would formally launch the new division on Monday.
What’s worth noting is the stock is still significantly higher than the $15 a share it traded for on April 29. As word of the e-commerce venture began to circulate, the stock began to rise. Still, the major sell-off is a rather big surprise.
The stock was due for a pullback, but what happened on Monday seemed somewhat irrational. More than 1.5 million shares of the stock changed hands on Monday, compared to the average of less than 56,000 shares.