AXT Inc (NASDAQ:AXTI) shares are trading lower Tuesday morning after the company priced a $550 million underwritten public offering at $64.25 per share.
- AXT shares are retreating from recent levels. Why are AXTI shares down?
Dilution Concerns Weigh On AXT Tuesday
The deal covers 8,560,311 shares, with AXT also granting underwriters a 30-day option to purchase up to 1,284,046 additional shares, which could lift gross proceeds to about $632.5 million if fully exercised.
The stock appears under pressure because equity offerings typically raise dilution concerns, especially after a massive run. AXT had already surged more than 6,500% over the past year and about 381% year to date before the offering news, setting up the stock for a pullback once investors digested the capital raise. In after-hours trading Monday, shares fell 6.5% to $73.51.
AXT said it plans to use the proceeds primarily to support subsidiary Beijing Tongmei Xtal Technology as it works to expand indium phosphide substrate production for export worldwide. The company also said funds will support research and development, working capital and other general corporate purposes. The offering is expected to close on or about April 22, subject to customary conditions.
Analyst Price Targets Still Imply Upside Despite Mixed Recent Calls
The stock carries a Buy Rating with an average price target of $19.67. Recent analyst moves include:
- B. Riley Securities: Neutral (Raises Target to $21.00) (Feb. 20)
- Wedbush: Outperform (Raises Target to $28.00) (Feb. 20)
- Needham: Downgraded to Hold (Jan. 20)
AXTI Shares Slide Tuesday Morning
AXTI Stock Price Activity: Axt shares were down 9.39% at $71.36 during premarket trading on Tuesday, according to Benzinga Pro data.
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