Why Blackstone Stock Tumbled Nearly 19% in December
Shares of Blackstone (NYSE: BX) plunged 18.9% in December, according to data provided by S&P Global Market Intelligence. The biggest factor weighing on shares of the leading alternative asset manager was a surge in redemption requests at its non-traded REIT, Blackstone Real Estate Income Trust (BREIT). That spooked investors and caused analysts to lower their expectations for the stock.
Blackstone started tapping into the retail investor market in 2017 when it launched BREIT to provide high-net-worth investors access to institutional quality private real estate investments. It crafted that product to meet retail investors' need for liquidity, which it offers monthly. However, it caps redemptions at 2% of its net asset value (NAV) in a calendar month and 5% of its quarterly NAV, so it doesn't need to sell real estate at an inopportune time to repurchase shares.
With the public stock and bond markets selling off last year, a growing number of BREIT investors, especially those in even harder-hit Asian markets, sought to cash in on their BREIT shares, which had held their value. These redemption requests exceeded Blackstone's limit in November. As a result, the company could only fulfill 43% of the redemption requests it received.
Source Fool.com
