AXT Inc. (NASDAQ: AXTI) Shares Plunge 5.07% in Pre-Market Trading as New Public Offering Sparks Investor Concerns

AXT Inc. (NASDAQ: AXTI) shares plunged 5.0748% in pre-market trading on December 30, 2025, as investors reacted to the company’s announcement of a new public offering. The stock price decline followed the pricing of the offering at $12.25 per share, with the company set to raise approximately $87 million in gross proceeds from the sale of 7.098 million common shares. A 30-day option for underwriters to purchase an additional 1.065 million shares could further increase total proceeds to $100 million if fully exercised.

The capital raise is intended to fund expansion of manufacturing capacity at AXT’s Beijing-based subsidiary, Beijing Tongmei Xtal Technology, specifically for indium phosphide substrates destined for global export. The company highlighted rising industry demand as a key driver for the expansion, alongside allocation of funds for research and development of new products. However, concerns over equity dilution from the new issuance appear to have weighed heavily on investor sentiment, overshadowing the strategic rationale for the capital raise.

Underwriters for the offering include Northland Capital Markets as sole bookrunner, with Wedbush Securities and Craig-Hallum Capital Group serving as co-managers. The transaction is expected to close by December 30, 2025, pending standard regulatory conditions. Analysts note that while the expansion aligns with long-term growth ambitions, the near-term market reaction underscores investor skepticism toward dilutive financing moves in a sector sensitive to supply-demand dynamics.

Industry analysts have long anticipated a shift in demand patterns for semiconductor materials, including indium phosphide, as the 5G and optoelectronics sectors continue to evolve. AXTI’s strategic push into advanced substrate manufacturing could position it as a key player in this niche, though the company will need to balance growth ambitions with market perceptions of risk. The timing of the equity offering has also drawn attention, as it coincides with a broader trend of tech firms seeking capital in a low-interest rate environment.