Super Micro Computer (SMCI.O) announced on Tuesday its plan to sell 2 million shares, potentially raising around $2 billion.
This news resulted in an 11% decline in the AI server manufacturer’s stock price.
Since January, Super Micro’s shares have seen a remarkable increase, more than tripling in value.
This rise has positioned the equity sale as an attractive method for fundraising.
However, this comes with a caveat for investors; the company’s recent success raises concerns about whether it can fulfill heightened expectations, making the investment a risky proposition.
Super Micro has distinguished itself in the competitive data center market through its rapid development of AI-optimized servers and proprietary liquid cooling technology.
These advancements have cemented its role as a vital supplier.
Moreover, the company’s soaring market valuation recently secured its spot in the S&P 500 index on Monday.
This inclusion necessitates that exchange-traded funds (ETFs) tracking the index now incorporate Super Micro’s shares in their portfolios.
Despite the share price decline following the announcement of the share sale, Super Micro is expected to net about $1.8 billion from this offering.
This follows a previous capital raise of $1.7 billion through a convertible bond offering last month, aimed at supporting the company’s expansion efforts.
The funds from the current share offering are earmarked for several key areas.
According to a regulatory filing with the U.S. Securities and Exchange Commission, Super Micro intends to use the proceeds to acquire inventory, enhance manufacturing capabilities, bolster research and development, and for other working capital needs.
Post-offering, the total outstanding shares of the company will rise to 58.6 million.
Additionally, the underwriter for this offering, Goldman Sachs, has been granted the option to purchase up to 300,000 more shares within a 30-day period, potentially increasing the total funds raised.