AeroVironment Inc. (AVAV) shares plummeted 5.28% in pre-market trading on Tuesday, extending the previous day's after-hours losses. The significant drop comes in response to the company's announcement of substantial common stock and convertible notes offerings totaling $1.35 billion, which has sparked investor concerns about potential share dilution and increased debt burden.

The drone and defense technology company unveiled plans to offer $750 million in common stock and $600 million in convertible senior notes due 2030. AeroVironment stated that the proceeds would be used to repay existing debt under its term loan and outstanding borrowings under its revolving credit facility. Any remaining funds would be allocated for general corporate purposes, including increasing the company's manufacturing capacity. J.P. Morgan and BofA Securities are leading the management of these offerings, with Raymond James also involved in the convertible notes offering.

While this capital infusion may strengthen AeroVironment's financial position and support its growth prospects, the immediate market reaction reflects investor wariness about the offerings' impact on existing shareholders and the company's financial structure. The company has granted underwriters a 30-day option to purchase additional shares and notes to cover over-allotments, further adding to dilution concerns. The completion of these offerings remains subject to market conditions, introducing an element of uncertainty that appears to be weighing heavily on investor sentiment in the pre-market session.