The analyst advises exiting $AXTI if the proposed dilution passes, expecting a recovery if it fails. They express distrust in management's use of dilution authority, similarly referencing $IREN.
Potential dilution of shares by board proposal to add 50M shares, which the analyst views as a red flag and would lead them to not hold the stock if approved.
If you’re curious about $AXTI: It’s down 21% on the new potential dilution news. Board wanted to add 50M more shares (up to $2B worth to dilute) for shareholders vote in the 14th. 70m -> 120m shares. I say this about $IREN excessive $6B dilution and it’s the same with AXT price proposal that I hold. I would not “trust in management” to use it wisely and the fact it’s filed is a red flag. That being said: we’ll see what happens on the 14th. If it passes for 50m more share authorized dilution, I personally would not hold. But it fails, I expect a recovery.
| Horizon | Raw move | vs SPY |
|---|---|---|
| 1 day | +8.3% | +8.2% |
| 1 week | +58.3% | +54.1% |
| 1 month | +149.7% | +138.3% |
| 3 months | +51.3% | +37.3% |
| 6 months | — | — |