stock market

Skechers stock is going to be delisted from the NYSE – what you need to know

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Who is buying Skechers? skechers news

Skechers U.S.A., Inc. (NYSE: SKX) has announced a landmark $9.4 billion acquisition by investment firm 3G Capital, marking its transition to a privately held company. The deal, set to reshape the footwear giant’s future, will lead to its delisting from the New York Stock Exchange. Here are five critical details shareholders and investors need to know:

1. Acquisition Triggers Delisting

3G Capital will acquire Skechers for $63.00 per share in cash, a 30% premium over its 15-day average stock price. The transaction, approved unanimously by Skechers’ board, is expected to close in Q3 2025. Post-closure, Skechers’ shares will be delisted, ending its 30-year run as a publicly traded company. The move reflects a growing trend of firms opting for private ownership to avoid public market pressures.

2. Shareholder Options: Cash or Equity in a Private Entity

Shareholders have two payment options:

  • $63.00 per share in cash (immediate liquidity).
  • $57.00 in cash + one unlisted, non-transferable equity unit in the new private parent company.

Notably, founder Robert Greenberg and family have committed to the mixed payment, signaling confidence in Skechers’ private future. However, the equity units lack liquidity, meaning shareholders cannot trade them publicly—a key consideration for investors seeking flexibility.

3. Leadership and Strategy Remain Unchanged

Skechers will continue under CEO Robert Greenberg and its current management team, with headquarters staying in Manhattan Beach, California. The company plans to maintain its focus on international expansion, direct-to-consumer growth, and innovation. Going private may allow Skechers to pursue long-term strategies without quarterly earnings scrutiny, potentially accelerating initiatives like global distribution and technology investments.

4. Strong Financials and Deal Rationale

Skechers reported record 2024 revenue of $9 billion ($640 million net earnings), underscoring its robust market position. The acquisition at a premium suggests 3G Capital sees untapped value, possibly in Skechers’ 15% revenue exposure to China and its wholesale growth potential. Delisting could provide operational flexibility amid challenges like U.S. tariffs (not addressed in the release) and shifting trade dynamics.

5. Navigating Risks as a Private Company

While privatization offers advantages, Skechers faces external headwinds:

  • Trump-era tariffs impacting shoemaking costs.
  • Dependence on China for 15% of revenue (per FactSet).

As a private entity, Skechers may mitigate these risks through strategic adjustments away from public scrutiny. However, shareholders opting for equity units must trust management’s ability to navigate these challenges without the transparency of public reporting.

Also Read – Forget Stocks – Warren Buffett’s Life-Changing Advice from the 2025 Berkshire Hathaway Investors Meeting Will Open Your Eyes

Key Takeaways

  • Skechers’ stock surged 25% pre-market to $61.78 following the announcement.
  • The deal underscores confidence in the brand’s resilience and growth prospects.
  • Shareholders must decide between immediate cash or illiquid equity by the Q3 2025 closure.

As Skechers transitions to private ownership, stakeholders should weigh liquidity needs against long-term faith in the company’s vision. For the broader market, this acquisition highlights the evolving landscape where firms increasingly seek refuge from public market volatility.

Disclaimer:
The views and opinions expressed in this article are solely those of the author and are intended for informational purposes only. They do not constitute financial, investment, or trading advice. Any stock price predictions mentioned are purely speculative and based on personal analysis. Past performance is not indicative of future results. Readers are advised to conduct their own research and, if necessary, consult a certified financial advisor before making any investment decisions. The author does not accept any liability for financial losses or gains arising from the use of this content.

What is 3G Capital?

3G Capital is a global private investment firm known for acquiring and managing consumer-focused brands with long-term growth potential. Founded in 2004, it has built a reputation for partnerships with iconic companies, emphasizing operational efficiency, cost discipline, and strategic expansion.

What is Options Trading?-Understanding the Basics of Options Trading

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https://feelthecandlesticks.com/introduction-to-options-trading/

Have you ever wondered how you can invest in the stock market without actually buying the stocks? Or maybe you’ve heard of options trading and want to know what it’s all about. Well, you’re in the right place! Today, we’re going to break down the basics of options trading, explain how it works, and why it might be an interesting option for your investment strategy.

The Official Definition of an Option

An option is a financial contract that gives the buyer the right, but not the obligation, to buy or sell an asset at a predetermined price within a specified time period. The buyer pays a premium for this right.

  • Options are financial derivatives. This means their value is derived from the value of an underlying asset, like a stock.

What is options trading in simple words?

Options trading is like having a special contract that gives you the right to buy or sell an asset (like stocks) at a specific price (strike price) before a certain date. Think of it as making a deal with someone to buy or sell something in the future, but with more flexibility.

A Simple Example

Imagine you have an option to buy a bike. The term “option” means you have a choice. This option lets you choose to buy the bike or not. It’s totally up to you. If you decide to buy the bike, you get it after paying the price. If you don’t want to buy it, you simply walk away.

In the same way, options trading lets you buy or sell stocks at a fixed price within a set time frame.

Right, Not Obligation

Having an option means you have the right to buy or sell the asset, but you’re not obligated to do so. This gives you a lot of flexibility.

The Cost of Flexibility: Premium

To get this flexibility, you have to pay a fee to the other person involved in the deal. This fee is called a premium.

Why Pay a Premium?

Think of it from the seller’s perspective. If you make a deal to buy the stock but then decide not to, the seller might have wasted his time waiting for you to buy it. In the meantime, he could have sold his asset to someone else but did not, just for you. To make it fair, the seller charges you a premium. This way, he gets some money for giving you the option. It’s like a fee for the privilege. Even if you decide not to exercise the option, the seller keeps the premium as their compensation.

Types of Options

There are two main types of options:

Call Options

  • A call option gives you the right to buy an asset at a specific price before a certain date. For example, if you think a stock’s price will go up, you might buy a call option to purchase it at today’s price, even if the price goes up in the future.

Put Options

  • A put option gives you the right to sell an asset at a specific price before a certain date. This can be useful if you think the stock’s price will go down. You can sell it at today’s price even if the price drops.

There are also types of options based on the method of exercising them. The most common ones are American and European options.

  • American Options: These can be exercised at any time before the expiration date.
  • European Options: These can only be exercised on the expiration date.

In India, the options traded on the stock exchanges are primarily European-style options. This means that they can only be exercised on the expiration date. Both the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) offer European-style options on various stocks and indices.

There are also exotic options, which have more complex features and are usually used by advanced traders. Exotic options include things like barrier options and binary options, which work differently than regular call and put options, offering unique structures and payoffs.

Why is it Important?

Options trading is popular because it allows investors to:

  • Diversify their portfolios: Spread out investments to reduce risk.
  • Hedge against risks: Protect against potential losses in other investments.
  • Speculate on market movements: Make bets on whether prices will go up or down.

ALSO READ – The History of Options Trading in India

How Options Trading Works

Basic Mechanics

Options contracts are agreements between two parties: the buyer and the seller. The buyer pays a premium for the option, which is like a fee for having the right to buy or sell the asset.

Key Elements

  • Strike Price: The price at which the asset can be bought or sold. For call options, it is the price at which you can buy the asset. For put options, it is the price at which you can sell the asset.
  • Expiration Date: The date by which the option must be exercised.
  • Premium: The cost of buying the option.

Examples

(1) Buying a Call Option: Imagine you buy a call option for a stock with a strike price of ₹2,000. A call option gives you the right, but not the obligation, to buy the stock at this price within a certain time frame. If the market price of the stock rises to ₹2,500, you can exercise your option to buy the stock at ₹2,000. This means you can purchase the stock for ₹500 less than its current market price, resulting in a profit. Here’s how it works:

  • Buy Call Option: You pay a premium (let’s say ₹50 per stock) to buy the call option with a strike price of ₹2,000.
  • Market Price Increases: The market price of the stock goes up to ₹2,500.
  • Exercise the Option: You exercise your option to buy the stock at ₹2,000.
  • Profit Calculation:


    Market Price: ₹2,500


    Strike Price: ₹2,000


    Premium Paid: ₹50


    Profit per Stock: ₹2,500 – ₹2,000 – ₹50 = ₹450


    By exercising the option, you can buy the stock at ₹2,000 and sell it at the market price of ₹2,500, making a net profit of ₹450 per stock (after deducting the premium).

(2) Buying a Put Option: Imagine you buy a put option for a stock with a strike price of ₹400. A put option gives you the right, but not the obligation, to sell the stock at this price within a certain time frame. If the market price of the stock falls to ₹350, you can exercise your option to sell the stock at ₹400. This means you can sell the stock for ₹50 more than its current market price, resulting in a profit. Here’s how it works:

  • Buy Put Option: You pay a premium (let’s say ₹20 per stock) to buy the put option with a strike price of ₹400.
  • Market Price Decreases: The market price of the stock drops to ₹350.
  • Exercise the Option: You exercise your option to sell the stock at ₹400.
  • Profit Calculation:

Market Price: ₹350

Strike Price: ₹400

Premium Paid: ₹20

Profit per Stock: ₹400 – ₹350 – ₹20 = ₹30

By exercising the option, you can sell the stock at ₹400 and avoid selling it at the market price of ₹350, making a net profit of ₹30 per stock (after deducting the premium).

Conclusion

Options trading offers exciting opportunities for traders who understand its basics. By learning about options, how they work, and the key concepts involved, you can start your journey. Keep educating yourself and practice with small trades to gain experience. Happy trading!

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What is the difference between call and put options?

A call option gives you the right to buy, while a put option gives you the right to sell.

How is the price of an option determined?

It’s based on factors like the underlying asset’s price, the strike price, the time to expiration, and market volatility.

Related Post

This textile company announces a share buyback worth ₹278 crore – Shareholders could see significant gains?

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https://feelthecandlesticks.com/this-textile-company-announces-a-share-buyback-worth-₹278-crore-shareholders-could-see-significant-gains/

Welspun Living Ltd., a prominent name in the textile industry, has recently made a couple of important announcements. They have approved a buyback of their own shares and also shared their financial results for the June quarter. Let’s dive into what this means for the company and its shareholders.

What is a Share Buyback?

A share buyback is when a company decides to purchase its own shares from the market. This is usually done to reduce the number of shares available in the market, which can help boost the share price. In Welspun Living’s case, they plan to buy back up to 1.26 crore shares at ₹220 each. This price is 26% higher than the closing price of the shares on Tuesday.

Why is the Buyback Important?

Welspun Living is set to buy back these shares for a total amount of ₹278 crore. This buyback will cover about 7.87% of the company’s total equity. The record date for this buyback is August 5, 2024. This means that if you own shares of Welspun Living by this date, you are eligible to participate in the buyback.

The buyback will follow a “tender offer” procedure. This means that shareholders can offer their shares to the company at the fixed price of ₹220. DAM Capital Advisors has been hired to manage this buyback process.

About Welspun Living

Welspun Living is a major textile manufacturer based in Mumbai. It was previously known as Welspun India and was founded in 1985.

What does Welspun Living do?

The company exports its home textile products to over 50 countries. It is a key supplier to many top global retailers. The company’s manufacturing facilities in Gujarat are equipped with advanced technology to produce a vast amount of textiles each year.

Welspun Living’s Financial Performance

Along with the buyback announcement, Welspun Living also shared its financial results for the June quarter. Here’s a quick overview:

  • Revenue: The company earned ₹2,536.5 crore, which is a 16% increase compared to the same period last year.
  • EBITDA: Earnings Before Interest, Tax, Depreciation, and Amortisation (EBITDA) rose by 10% to ₹342 crore.
  • EBITDA Margin: This margin fell slightly from 14.2% last year to 13.5% this year.

Despite challenges from global economic conditions and shipping issues in the Red Sea, Welspun Living saw a 20% growth in its exports. This positive news was highlighted by Chairman BK Goenka.

Also Read – Government Hikes LTCG, STCG, STT: But What Do These Taxes Mean for You?

Share reaction after the announcement

Following these announcements, Welspun Living’s share price saw a jump. The shares touched a high of ₹181.70 and a low of ₹173.24 on the day of the announcement.

How to Participate in the Buyback?

If you are a shareholder, here’s how you can take part in the buyback:

  1. Shares in Demat Form: If your shares are in electronic form, inform your stockbroker about the shares you want to tender. You’ll need to transfer these shares to a special account set up for the buyback.
  2. Shares in Physical Form: If you have physical share certificates, you must present them along with any required documents to your broker. After verifying the documents, the broker will place an order for the buyback on your behalf.

The Bottom Line

In summary, Welspun Living’s share buyback is a significant move aimed at enhancing shareholder value. Coupled with strong financial performance and growth in exports, it’s an exciting time for the company and its investors.

Disclaimer: This information is for educational purposes only and does not constitute financial advice. Always conduct your own research and consult with financial professionals before making investment decisions.

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Understanding Dabba Trading and CFDs

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https://feelthecandlesticks.com/what-is-dabba-trading/

Have you ever heard of “dabba trading”? It sounds a bit unusual, but it’s a serious issue in the trading world. Let’s break down what dabba trading is, how it relates to CFDs (Contracts for Difference), and whether it’s legal.

What is Dabba Trading?

Dabba trading is an illegal type of trading where deals are not recorded on the stock exchange. Instead, they happen secretly through untrustworthy brokers or websites.

These trades are not approved by any official rules, which makes them very risky and illegal.

‘Dabba’ means box. Brokers often used metal lunchboxes (called dabbas) to secretly record these off-market trades.

  • People started calling the secret stock bets “dabba trading” because the records of the trades were kept in a dabba (box) instead of being recorded by the stock market​

How Dabba Trading Works?

Dabba trading works by making stock market deals without using official stock exchanges like NSE or BSE. In this type of trading, the broker and the trader make a deal between themselves without recording it officially. No real buying or selling of shares happens. It is just a bet on the price movement.

In official stock exchanges, every trade is recorded properly, and it follows all government rules.

But in dabba trading, everything happens secretly without any record, making it illegal. Some people get involved in dabba trading by contacting local brokers who operate outside the legal system, but it is very risky and punishable by law.

Here is an easy example:


Imagine you and your friend are betting on a cricket match. Instead of going to an official place to place the bet, your friend just writes down who wins or loses. No real bet is placed anywhere. It is just between you two. This is similar to how dabba trading works. In dabba trading, no real buying or selling of shares happens on the stock market. Everything is done secretly without any official record.

What are CFDs?

Contracts for Difference (CFDs) are a type of financial product that allows traders to speculate on price movements of assets like stocks, commodities, or currencies, without actually owning the asset.

For example, if you think the price of gold is going to go up, you can enter a CFD that will pay you the difference between the current price and the future price if it does go up. If the price goes down, you pay the difference.

Dabba trading and CFDs are similar because, in both, you are betting on price changes without actually owning the assets. However, CFDs are legal and regulated in many countries, whereas dabba trading is not. Here’s how they are related:

  1. No Ownership: In both dabba trading and CFDs, you don’t actually own the underlying asset. You’re just betting on price movements.
  2. High Risk: Both involve high risk. In dabba trading, there’s the added risk of no legal recourse if things go wrong.
  3. Platform as Counterparty: In some CFD platforms, the platform itself acts as the counterparty to your trades, meaning they win when you lose. This is similar to how dabba traders operate, where they benefit from your losses.

The Dark Side of Dabba Trading

Some platforms misuse the concept of CFDs to carry out dabba trading. They attract traders with promises of easy profits and no brokerage fees, but in reality, they operate like a casino. The platform often manipulates prices, ensuring that traders lose more often than they win. These dabba trading platforms profit from client losses.

The Legality of Dabba Trading and CFDs

Dabba Trading: This is outright illegal in India. It bypasses official stock exchanges and regulatory oversight, leading to potential fraud and financial scams. Engaging in dabba trading can result in heavy penalties and legal action.

CFDs: CFDs, on the other hand, are legal in many countries but are heavily regulated. Regulators ensure that CFD providers operate fairly and transparently. However, in some regions, CFDs are banned or restricted due to their risky nature.

Why Should You Care?

Engaging in dabba trading or using unregulated CFD platforms can lead to significant financial losses. Here are some reasons to be cautious:

  1. Lack of Legal Recourse: If something goes wrong in dabba trading, you have no legal protection. Your money is essentially at the mercy of the broker.
  2. Price Manipulation: Unregulated platforms can manipulate prices to ensure you lose.
  3. High Losses: Both dabba trading and CFDs can lead to substantial losses, especially for inexperienced traders.

Final Thoughts

While dabba trading might seem like a quick way to make money, it’s illegal and full of risks. CFDs, although legal in many places, still carry high risks and require careful consideration and understanding before trading. Always trade on regulated platforms and be wary of offers that sound too good to be true. Remember, in trading, there’s no such thing as easy money.