TeraWulf reported plans for an $800 million equity offering and disclosed preliminary first-quarter results that came in below Wall Street expectations, prompting a drop in its shares in premarket trading.
Shares of TeraWulf fell 6.6% to $19.45 in premarket trading on Wednesday following the disclosures. The company said the proposed offering would provide net proceeds that will be directed to a set of defined priorities.
Use of proceeds and advisers
TeraWulf said it intends to apply net proceeds from the offering in several ways: to partially fund construction of a data center at its Hawesville, Kentucky site; to fully repay its credit facility; to pursue future acquisitions; and for general corporate purposes. Morgan Stanley will act as lead bookrunner for the offering, and Cantor Fitzgerald will serve as TeraWulf's capital markets advisor.
Preliminary first-quarter results
The company provided preliminary results for the first quarter, forecasting revenue in a range of $30 million to $35 million and adjusted EBITDA between $0 million and $3 million. TeraWulf reported holding $3.1 billion in cash as of March 31. Those preliminary figures were below analyst projections, with Wall Street estimates at $40 million for revenue and $8.8 million for adjusted EBITDA for the quarter.
Market reaction and context
Following the announcement of the offering and the release of the preliminary results, TeraWulf's stock moved lower in premarket trading, reflecting investor response to both the dilutive financing plan and the weaker-than-expected operating metrics. The company identified specific applications for the offering proceeds, including capital work at the Hawesville data center and repayment of debt, and named its financial advisers for the transaction.
The figures provided by the company are preliminary and framed relative to analyst expectations; no additional forward guidance was included in the disclosures.