Zagg Inc.'s (NASDAQ:ZAGG) micro cap stock fell sharply on Monday after company CEO Robert Pedersen sold 14 percent of his stake then resigned from his position, Reuters reports.
According to the news source, Pederson, who also co-founded the company, made a move known as a margin call, or a demand made by a broker that an investor provide more cash to cover losses on a security. When this is performed by C-suite players, it is typically condemned by regulators, with former SEC chairman Arthur Levitt going so far as to say it should be banned entirely.
The stock saw heavy losses when the news broke, but analysts say there is still plenty of room to fall if speculation about Pederson's resignation continues. But if there is a silver lining in the depature, it would be that that the company is increasingly dependent on its board, said Roth Capital Partners analyst Dave King.
"It also lifts an overhang on shares, since some investors viewed Pedersen more as an entrepreneur than the leader of a $250 million company, and [interim replacement Randall] Hales may be better suited to lead during Zagg's next stage of growth," he said.
As of 3:41 p.m. on Monday, August 20, the Zagg stock was down 13.1 percent to $7.32