On August 20, Nebius Group (NBIS) priced a $5 billion senior notes offering. It is issuing $3B of 0.50% convertible notes that are due in 2030. IT has another $2B of 4.5% due in 2034. The exercise price for the 2030 notes is $313.46.
Nebius will raise between $4.9B and $5.7B. It needs the funds to expand its AI business. To support its strong growth, Nebius needed to sell the notes. The stock dropped well before the offering in mid-August, when the stock traded at around $280. It closed at $219 last week.
The upsized offering indicated that investors are bullish that Nebius’s stock will trade above $313.46.
Fabrinet (FN) fell from over $600 before its earnings report to close at $436.67 on August 21. The optical manufacturing services provider posted an EPS of $4.10 (non-GAAP) in Q4. Revenue of $1.32 billion is up 45.1% Y/Y. Despite forecasting fiscal Q1 non-GAAP net income of up to $4.25 per share, the stock dropped.
Stock markets already priced in the firm’s accelerating margin expansion and revenue growth. Looking ahead, management is confident in its outlook. It has strong demand visibility and multiple growth vectors. This view is consistent with that offered by Lumentum (LITE), Ciena (CIEN), and Coherent (COHR).
Your Takeaway
Let the selling pressure ease before considering either firm.
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