AXT (AXTI) Shares Recede After $550 M Offering Followed by Huge 12‑Month Rally

TLDR

• AXT has disclosed a public stock offering priced at $64.25 per share, with a goal of raising as much as $632.5 million when including underwriter options.
• Following the news, the stock declined approximately 12% during Tuesday’s premarket trading session.
• First-quarter revenue is projected to be between $26 million and $28 million, an increase from $19.4 million a year earlier, yet the company anticipates a net loss in the range of $1.6 million to $2.6 million.
• The funds raised are intended to finance an expansion of production capacity at its Beijing Tongmei subsidiary, specifically for manufacturing indium phosphide substrates.
• This pullback slightly diminishes the exceptional 5,867% return the stock had generated over the previous 12 months.

(SeaPRwire) –   AXT Inc. (AXTI) has stood out as one of the top market performers throughout the last year. A gain of 5,867% over a 12-month period is an exceptionally rare occurrence. However, Tuesday introduced some volatility, with the compound semiconductor manufacturer’s shares falling about 12% in premarket activity subsequent to its announcement of a stock offering.

AXT, Inc., AXTI

During premarket trading, the stock was changing hands near $69.43, a decrease from its previous closing price, which had valued AXT’s market capitalization at $4.38 billion.

The offering, which is being managed by Northland Securities, has been set at a price of $64.25 per share. AXT is issuing 8,560,311 shares of common stock, and the underwriters have a 30-day option to purchase an extra 1,284,046 shares. The base amount of proceeds is estimated to be approximately $550 million, which could increase to about $632.5 million if the underwriters exercise their option in full. The transaction was scheduled to conclude on April 22.

The company stated that the primary use of the capital will be to bolster its subsidiary, Beijing Tongmei Xtal Technology, a producer of indium phosphide substrates that are exported globally. The remaining funds will be allocated to research and development, working capital, and other general corporate needs.

All of the company’s executive officers and directors have committed to a 60-day lock-up period for their shares following the date of the prospectus supplement.

Why Indium Phosphide Matters Right Now

Indium phosphide substrates are a critical component used in optical networking equipment found within data centers. Demand for these materials has increased sharply as the construction of AI infrastructure fuels the need for high-speed data transmission. This market environment is what catalyzed AXT’s remarkable stock appreciation during the past year.

In addition, the company manufactures gallium arsenide and germanium wafers, catering to sectors such as 5G, LED lighting, lasers, sensors, and solar cells for satellites. Its production operations are located in China, where it runs three manufacturing plants and has minority ownership interests in ten suppliers of raw materials.

Even with the powerful stock performance, AXT’s financial results indicate it is still progressing toward profitability. The company’s guidance for the first quarter forecasts revenue of $26 million to $28 million, representing growth compared to the $19.4 million reported in the same quarter of the previous year. However, it still projects a net loss for the quarter, estimated to be between $1.6 million and $2.6 million.

Valuation Under the Microscope

Based on Monday’s closing price, AXT was valued at a forward price-to-earnings ratio of approximately 535. This high multiple places significant pressure on the company to deliver strong operational results. Any indication of decelerating growth or persistent losses could rapidly impact the stock price.

The latest analyst recommendation for the stock is a Buy, accompanied by a $90 price target.

The offering was publicized late on Monday, and the stock’s negative reaction in premarket trading was swift on Tuesday morning.