Why Is Blackstone (BX) Stock Down 7% Today?

  • Blackstone (BX) stock is plunging about 7% in today’s session.
  • This move comes on worries around withdrawal limitations being put in place for Blackstone’s real estate investment trust (REIT).
  • Investors appear to be looking to cash out of BX stock, which has outperformed peers this year.
A sign for Blackstone (BX) hangs on a white wall.
Source: Isabelle OHara / Shutterstock.com

Following the impressive rally we saw late in yesterday’s session, investors appear to be selling the rip. This afternoon, most indices are trending lower, with many top-tier stocks seeing significant declines. That said, investors in Blackstone (NYSE:BX) are among the hardest-hit; BX stock is currently trading about 7% lower.

This decline follows news that the alternative asset management firm has halted withdrawals from its massive retail real estate investment trust (REIT). The company’s Blackstone REIT, or BREIT, hit its redemption limit, limiting withdrawals from investors. This has sent shares of its parent company sharply lower.

In plain speak, when a fund hits its redemption limit, shareholders aren’t able to pull their capital out or are limited in how much they’re able to divest. Accordingly, such situations can lead to panic selling, which appears to be taking place today.

Let’s dive into what investors should make of this BX stock news.

What’s Going on With BX Stock Today?

Blackstone is a massive company in many different alternative asset classes. That said, real estate is its bread and butter, with the company’s REIT holding $69 billion in assets as of the end of October.

Thus, the scale of redemption requests that appear to have overwhelmed Blackstone may be worrisome to some investors. Some experts suggest that this pullback could indicate institutional investors are growing wary of real estate assets in this higher interest rate environment.

Most real estate assets have trended lower since the summer, as interest rate hikes start to weigh on asset valuations. Accordingly, with a potential recession looming, it’s unclear how retail real estate will perform. For those looking to take risk off the table, BX stock appears to be a clear target. Additionally, BREIT has outperformed its counterparts, suggesting that many investors simply want to take their profits and run.

Blackstone appears to be doing some trimming around the edges in its own right, announcing the sale of its stake in the MGM Grand and Mandalay Bay Las Vegas casinos. The company is selling its stake to Vici Properties (NYSE:VICI), which owns the other half of the casinos.

On the date of publication, Chris MacDonald did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.


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