Super Micro Computer (SMCI.O), which opens a new tab, announced on Tuesday that it will sell 2 million shares, which may fetch approximately $2 billion. This news caused the shares of the artificial intelligence server manufacturer to drop by 11%.
Since the beginning of the year, the shares of the San Jose-based company have increased by more than three times, making the sale of equities an attractive option for raising capital.
Nevertheless, investors who are afraid that Super Micro would not be able to live up to their enhanced expectations may put themselves in a hazardous position if they purchase the shares after their remarkable rally.
As a result of Super Micro's capacity to rapidly produce servers that are suited for artificial intelligence and its in-house liquid cooling technology, the business has become a significant provider of data center services.
The The recent increase in the market capitalization of Super Micro led to the company's inclusion in the S&P 500 index (.SPX), which allows for the opening of a new tab on Monday. The implication of this is that exchange-traded funds that track the index are now required to own shares of Super Micro.
Due to the fact that Super Micro's shares dropped after the announcement of the share sale on Tuesday, the business has the potential to raise around $1.8 billion through the offer. Last month, the company conducted a convertible bond offering, which resulted in the raising of $1.7 billion to drive business expansion.
The business stated in a regulatory document that was submitted to the United States Securities and Exchange Commission on Tuesday that the proceeds from the most recent offering will be utilized for a variety of objectives, including the purchase of inventory, the expansion of manufacturing capacity, the increase of investments in research and development, and other working capital purposes.
According to the statement, the number of shares that are currently outstanding in the company will increase to 58.6 million following the offering. Additionally, the underwriter, Goldman Sachs, has the opportunity to purchase up to 300,000 additional shares within a period of thirty days.
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