Nebius Group (NBIS), a leading AI infrastructure company, saw its stock price plummet 7.24% in pre-market trading on Monday. The significant drop comes on the heels of the company's announcement of a $1 billion private placement of convertible notes.

According to the company's statement, Nebius Group has successfully placed $1 billion in senior unsecured convertible notes, split into two tranches. The first tranche consists of $500 million of 2.00% convertible notes due 2029, while the second tranche comprises $500 million of 3.00% convertible notes due 2031. The notes will pay interest semi-annually, starting from December 5, 2025.

While the company plans to use the proceeds to support its growth initiatives, including acquiring additional compute power and expanding its data center footprint, investors appear concerned about potential share dilution. Convertible notes can be converted into company shares, which may increase the number of outstanding shares and dilute existing shareholders' stake. This dilution effect often leads to downward pressure on stock prices following such announcements, as evidenced by Nebius Group's pre-market decline.