Affirm Holdings, Inc. (AFRM) stock plummeted 5.17% in Tuesday's pre-market trading session following the company's announcement of a private offering of $750 million in convertible senior notes and plans to repurchase up to $300 million of its common stock.

The "buy now, pay later" firm's decision to raise capital through debt offering and buy back shares appears to have spooked investors, leading to a sell-off in Affirm's stock. The company intends to use a portion of the net proceeds to repurchase some of its existing 0% convertible bonds due in 2026, with the remaining funds allocated for general corporate purposes.

Despite the stock's strong performance this year, with a 48% year-to-date gain as of Monday's close, investors seem concerned about the potential dilution and increased debt burden resulting from Affirm's latest moves. The news also comes on the heels of the company's recent partnership with Sixth Street, which agreed to invest up to $4 billion in Affirm's loans over the next three years.