Investing.com — Oracle (NYSE:ORCL) shares fell 10% on Thursday after the company announced a $10 billion stock offering alongside a $10 billion bond offering.
The software giant’s decision to issue new shares prompted the sharp decline, as such offerings typically dilute existing shareholders’ stakes in the company. Oracle launched both the equity and debt offerings to raise capital, though the company has not disclosed specific plans for the proceeds.
Despite the market reaction to the share offering, Stephens upgraded Oracle to Overweight earlier. “With lower capital intensity evidence/guidance, we think perceived riskiness of OCI came out of stock and FCF numbers went up dramatically even as rev/PF EPS/PF EBIT numbers did not really change,” the firm commented.
The dual offering represents a significant capital raise for Oracle as the company continues to invest in its cloud infrastructure business. The $10 billion bond offering provides debt financing, while the stock offering adds equity capital to the company’s balance sheet.
Stock offerings of this magnitude can weigh on share prices in the near term as the market absorbs the additional supply of shares and adjusts to the dilution impact on existing shareholders.
Original Article
Oracle shares fall after $10 billion stock offering
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Source: finance.yahoo.com
