What happened?
Shares of background screening provider First Advantage (NASDAQ: FA) fell 10.5% in the morning session after the company announced the launch of an underwritten secondary offering of 15,000,000 shares of common stock by selling stockholders affiliated with Silver Lake Group.
In a public announcement, First Advantage stated that the shares are being offered at a fixed price and confirmed that it is selling no shares and receiving no proceeds from the transaction. Secondary offerings by prominent institutional backers often prompt selling pressure, as a sudden increase in the available supply of shares can weigh on market prices. Additionally, large divestitures by major private equity sponsors like Silver Lake can lead investors to exercise caution, viewing the sizable sale as an indication that significant stakeholders are trimming their exposure.
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 First Advantage? Access our full analysis report here, it’s free.
What is the market telling us
First Advantage’s shares are extremely volatile and have had 34 moves greater than 5% over the last year. But moves this big are rare even for First Advantage and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 9 months ago when the stock gained 18.8% on the news that the company reported strong fourth-quarter 2025 results that beat analyst expectations on both revenue and profit and issued an optimistic full-year outlook.
The background screening provider posted revenue of $420 million, a 36.8% increase from the same period in the previous year and well ahead of Wall Street's forecasts. Adjusted earnings per share came in at $0.30, also surpassing expectations. Looking ahead, the company's full-year revenue guidance of $1.66 billion at the midpoint was higher than analysts had estimated, while its adjusted earnings forecast of $1.20 per share was also above consensus.
First Advantage is up 47.7% since the beginning of the year, but at $21.05 per share, it is still trading 12.7% below its 52-week high of $24.12 from August 2026. Investors who bought $1,000 worth of First Advantage’s shares 5 years ago would now be looking at an investment worth $1,024.
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