LifeStance Health Group, Inc. (LFST) shares plummeted 12.99% during intraday trading on Friday, as investors reacted negatively to a substantial secondary stock offering by existing shareholders.

The sharp decline is directly attributed to the pricing of a secondary public offering in which certain company stockholders, including private equity firms TPG Capital and Summit Partners, are selling 35 million common shares at $8.15 per share. The offering price represents a discount to the stock's recent trading levels and raises approximately $285 million.

While LifeStance Health itself is not selling shares in this offering and will not receive proceeds, the market typically reacts negatively to such large secondary offerings due to dilution concerns and the potential signal that major investors are seeking to reduce their holdings. The company has agreed to repurchase 6 million shares from the underwriter, J.P. Morgan, but this move has not alleviated investor concerns about the increased supply of shares hitting the market.