TLDR
- AXT announced a public stock offering at $64.25 per share, aiming to raise up to $632.5 million including underwriter options
- The stock dropped around 12% in premarket trading Tuesday following the announcement
- Q1 revenue is guided at $26M–$28M, up from $19.4M a year ago, but the company expects a net loss of $1.6M–$2.6M
- Proceeds will fund capacity expansion at its Beijing Tongmei subsidiary for indium phosphide substrate production
- The drop dents a remarkable 5,867% gain AXT had built up over the past 12 months
AXT Inc. (AXTI) has been one of the market’s standout performers over the past year. A 5,867% gain in 12 months is not something you see every day. But Tuesday brought some turbulence, as the compound semiconductor maker slid roughly 12% in premarket trading after announcing a stock offering.
The stock was trading around $69.43 in premarket, down from its prior close, which had put AXT’s market cap at $4.38 billion.
The offering, underwritten by Northland Securities, priced at $64.25 per share. AXT is selling 8,560,311 shares of common stock, with underwriters holding a 30-day option to buy up to 1,284,046 additional shares. Base proceeds are expected at around $550 million, rising to roughly $632.5 million if the full option is exercised. The deal was set to close April 22.
AXT said it plans to use the money primarily to support its Beijing Tongmei Xtal Technology subsidiary, which produces indium phosphide substrates for export worldwide. The rest goes toward R&D, working capital, and general corporate purposes.
All executive officers and directors agreed to a 60-day lock-up on their stock following the prospectus supplement date.
Why Indium Phosphide Matters Right Now
Indium phosphide substrates are a key material in optical networking products inside data centers. Demand has surged as AI infrastructure buildout drives appetite for high-speed data connections. That backdrop is what powered AXT’s extraordinary run over the past year.
The company also makes gallium arsenide and germanium wafers, serving markets including 5G, LED lighting, lasers, sensors, and satellite solar cells. Its manufacturing is based in China, where it operates three facilities and holds partial stakes in 10 raw-material suppliers.
Despite the strong stock run, AXT’s financials still show a company working its way toward profitability. The company guided Q1 revenue at $26 million to $28 million, which would be up from $19.4 million in the same quarter a year prior. But it still expects a net loss of between $1.6 million and $2.6 million for the quarter.
Valuation Under the Microscope
At Monday’s close, AXT was trading at a forward price-to-earnings ratio of around 535 times. That’s a number that demands execution. Any sign of slowing growth or continued losses can move the needle fast.
The most recent analyst rating on the stock is a Buy with a $90 price target.
The offering was announced late Monday, and the stock’s premarket reaction came quickly Tuesday morning.
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