Shares of Nebius Group plunged as much as 6% in pre-market trading on October 14, falling to $194.40, after the company unveiled a massive $4.5 billion convertible-note offering that spooked investors worried about ownership dilution — the risk that existing shares lose value when a company issues more stock. Nebius Raises Billions Again to Build AI Data Centers, but Its Growing Debt Pile Is Starting to Rattle Shareholders
Shares of Nebius Group slid 6% in pre-market trading to $194.40 on October 14 after the AI cloud company announced a $4.5 billion convertible-note offering — a type of loan that can later be swapped for stock — along with plans to exchange some existing debt for new shares. The drop extends a painful streak: the stock has fallen roughly 18% from $237.15 just a week earlier, wiping out more than $11 billion in market value.
• This Is Nebius's Third Mega-Debt Deal in Under a Year
The proposed transaction would be the company's third major convertible-notes offering of over $1 billion in less than a year.
Nebius already issued $4.16 billion in convertible notes in mid-2025, then closed a $4.3 billion deal in March 2026.
As of June 30, total convertible debt stood at roughly $10 billion in principal, carried at about $8.5 billion on the books. Adding another $4.5–5 billion means the company could owe more than $15 billion in convertible paper — against Q2 revenue of about $582 million and an annualized run rate near $3 billion.
• Immediate Share Dilution Hits Before Notes Even Convert
Some dilution arrives right away: alongside the new notes, Nebius agreed to exchange $400 million each of its existing 2029 and 2031 convertible notes for about 15.8 million Class A shares, retiring old debt but handing new shares to holders immediately.
If the new notes eventually convert, holders could receive roughly another 15.7 million shares — about 6% dilution against the 271.9 million shares outstanding — though only if the stock climbs 40%+ from the offering price.
• The Revenue Growth Is Real, but the Valuation Demands Perfection
Q2 revenue hit $582.3 million, a 454% jump from a year earlier, far exceeding Wall Street expectations. Yet at roughly $220 per share (before this week's selloff), the company was valued near $60 billion — about 44 times trailing revenue.
The price-to-sales ratio sits around 43, meaning any stumble in filling those data centers will punish the stock severely.
• History Suggests the Pain May Be Temporary — If Execution Holds
The March 2026 convertible offering caused a roughly 10% single-session drop on the same dilution fears, yet the stock later recovered to new highs. Management reaffirmed $20–25 billion in planned capital spending and a 40% adjusted EBITDA margin target, signaling confidence the cash will generate returns. The question is whether investors will keep funding a company that burns capital faster than it earns revenue — or whether Nebius is building infrastructure today that others will pay dearly to rent tomorrow.