Shares of TeraWulf Inc. (NASDAQ: WULF), a leading cryptocurrency mining company, plummeted by a staggering 8.67% on October 24, 2024, following the company's announcement of a $425 million convertible senior notes offering. The offering, which will be sold in a private placement to qualified institutional buyers, involves the issuance of 2.75% Convertible Senior Notes due in 2030.
Convertible debt offerings are often viewed negatively by investors, as they can lead to potential share dilution for existing shareholders when the notes are eventually converted into common stock. This dilution risk appears to be the primary factor weighing heavily on TeraWulf's stock price in early trading.
While TeraWulf plans to use a portion of the net proceeds to repurchase its stock, potentially offsetting some of the dilution concerns, the announcement of the sizable convertible notes offering has raised eyebrows among investors. The company's shares plunged more than 5% in pre-market trading on Thursday, reflecting the market's apprehension over the potential dilutive impact of the offering.
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