Shares of Karman Holdings (KRMN), a defense and space systems maker, plummeted 6.23% to $52.54 in pre-market trading on Tuesday. The sharp decline follows the company's announcement of a secondary offering, which has raised concerns among investors about potential stock dilution.

Late Monday, Karman Holdings revealed plans for a secondary offering of 20 million shares to be sold by existing stockholders. The selling shareholders include private equity firm Trive Capital and Karman CEO Tony Koblinski. Citigroup and Evercore ISI have been appointed as book-running managers for the proposed offering. This move has prompted a sell-off as investors react to the potential increase in the number of shares available in the market.

Despite the current downturn, it's worth noting that Karman Holdings has experienced significant growth since its initial public offering (IPO) in February. The company went public with a 23 million share IPO priced at $22 per share, and the stock has more than doubled since its debut on February 13. All five brokerages covering the stock maintain a "buy" or higher rating, with a median price target of $50.50, according to data compiled by LSEG. While the secondary offering has caused a short-term setback, the long-term outlook for the company remains positive among analysts, reflecting confidence in the space and defense sectors.