AXT Inc's stock experienced a significant pre-market plunge, dropping 5.59% as trading began on Thursday. This movement continues the recent volatility for the semiconductor materials company.

The decline appears to be driven primarily by investor concerns over share dilution following the company's completion of a $550 million underwritten public offering. The offering of approximately 8.6 million common shares priced at $64.25 per share has raised worries about the impact on existing shareholders' equity positions.

According to company statements, proceeds from the offering are earmarked primarily to support capacity expansion for indium phosphide substrates at its Beijing Tongmei Xtal Technology subsidiary. However, such follow-on offerings typically create downward pressure on stock prices as the market adjusts to the increased share count and potential selling pressure from the new shares entering circulation.