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The specter of shareholder dilution hangs over its latest capital-raising round.
It's floating around $150 million worth of new equity.
Highly specialized opto-electronic components company Poet Technologies (NASDAQ: POET) was highly unpopular with Mr. Market on Thursday. Investors expressed their displeasure at news of a capital-raising effort by selling the stock aggressively. As a result, it closed the day more than 17% lower.
That morning, Poet announced it was issuing just under 20.7 million shares of its common stock in a registered direct offering to investors. The company said it expects to realize around $150 million from the sale, net of expenses related to the issue. This prices each share at approximately $7.25.
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Image source: Getty Images.
In the press release trumpeting the flotation, Poet wrote that it intends to use the proceeds raised for corporate development, including "targeted" acquisitions it did not specify. It will also use the monies to bolster its research and development efforts and its high-speed optical module and light source offerings.
Of these latter products, Poet feels they are crucial in the build-out of artificial intelligence (AI)-capable infrastructure. It quoted CEO Suresh Venkatesan as saying that these goods "provide differentiated solutions at each level of AI infrastructure, from chip-to-chip data communications to data transfer within the data center to the mobile networks that deliver that data to users."
That may be so, but the new share issue feels dilutive given that Poet's current outstanding share count is just under 132 million. However, it feels like the company aims to invest its freshly raised funds in the right areas of its business, since AI technology is hot and will only get hotter in the coming years. This sell-off, then, might be a fine buy opportunity for Poet bulls.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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