The stock of Affirm dropped about 4% on Thursday after the business announced it would sell $1.25 billion in convertible notes to fund its expansion goals.
Affirm, a buy-now, pay-later financial institution, stated that the proceeds from the offering could be used for operating capital, capital expenditures, and related investments.
Within 13 days of the first issue, the parties to the offering will have the chance to purchase more paper worth $187.5 million.
The notes will be due on November 15, 2026, according to the business.
After November 20, 2024, Affirm may redeem all or part of the notes for cash, but only if the share price exceeds 130 % of the conversion price for a certain length of time.
A convertible note, as the name implies, is a debt instrument that can be changed into stock. Convertible notes are not always well received by investors, as the issuance of new equity reduces earnings per share.