Crocs (CROX) announced the purchase of Hey Dude, a privately held casual footwear company, for $2.5 billion on Thursday, and shares dropped 11.6% in one day.
Since all but $450 million is to be paid in cash, the deal is not terribly dilutive to existing shareholders. And while some may feel Crocs overpaid, the company said the acquisition “is expected to be immediately accretive to our high revenue growth, industry-leading operating margins and earnings.”
I believe this is a smart way for Crocs to expand its brand portfolio and digital presence. Shares are likely to rebound from these depressed levels, but we may need to wait until the next earnings report in February to see how forecasts have changed.
We’re going to wait and see where the stock goes from here before making any moves.
Current Stock Price: $123.93
Cost Basis: $149.20
Action: No action is needed on the CROX Jan Monthly (1/21) 140 Call at this time