Shares of AXT, Inc. (NASDAQ:AXTI) fell about 9% in after-hours trading on Monday after the compound semiconductor wafer substrate manufacturer disclosed plans for a public offering of its common stock.
The company said it intends to offer and sell shares of common stock and that the underwriting group will have a 30-day option to purchase up to an additional 15% of the shares at the public offering price, less underwriting discounts. AXT cautioned that the offering is conditioned on market and other factors, and that there is no assurance regarding whether the transaction will be completed, or what the ultimate size or terms would be.
AXT stated that net proceeds from the planned offering would be used primarily to provide financial support to its subsidiary, Beijing Tongmei Xtal Technology Co., Ltd., for efforts to increase capacity to produce indium phosphide substrates intended for export worldwide. The company added that remaining proceeds are intended to support research and development of new or improved products, working capital needs and general corporate purposes.
Northland Capital Markets is serving as sole bookrunner for the proposed offering. Needham & Company, B. Riley Securities, Inc., Craig-Hallum Capital Group LLC and Wedbush Securities Inc. are named as co-managers.
Public offerings of equity typically expand the number of shares outstanding, which dilutes existing shareholders’ percentage ownership. Such dilution often prompts negative reactions from investors because the ownership stake and claims on earnings and assets are spread across a larger share count; that dynamic helps explain the sell-off in AXT stock in after-hours trading following the announcement.
AXT emphasized the conditional nature of the offering and the absence of guarantees about the completion, final size or pricing. Beyond the use-of-proceeds statements, the company did not provide additional operational forecasts or timelines in the announcement.
Clear summary
AXT revealed plans for a common stock offering, including an underwriter option to buy an extra 15% of the shares. The company said proceeds will primarily support capacity growth at its Beijing subsidiary for indium phosphide substrate exports and will also fund R&D, working capital and general corporate purposes. The announcement coincided with an approximate 9% drop in after-hours trading and the company noted the offering remains subject to market and other conditions.