Shares of Rubrik Inc. (RBRK), the cybersecurity firm backed by Microsoft, tumbled 5.53% in pre-market trading on Tuesday following the announcement of a $1 billion convertible debt offering. The significant move comes as the company seeks to raise capital for strategic purposes, potentially causing concern among investors about share dilution.

Rubrik plans to offer $1 billion in 5-year convertible senior notes due 2030, with an option to purchase an additional $150 million. The company intends to use the net proceeds for several purposes, including paying for capped call transactions to reduce potential dilution, fully repaying approximately $328 million of outstanding loans, and terminating its existing credit agreement. Additionally, Rubrik aims to use the funds for potential acquisitions, strategic investments, and working capital.

The market's negative reaction to this news highlights investors' concerns about the potential dilutive effect of convertible notes on existing shareholders. However, it's worth noting that Rubrik's stock has performed well year-to-date, with a 42.5% gain as of Monday's close, even after a 4.9% drop to $93.15. The company, which went public in April 2024 at $32 per share, has seen significant growth since its IPO, maintaining a market capitalization of approximately $18 billion based on about 193.4 million shares outstanding as of May 31.