AeroVironment Inc. (AVAV) shares tumbled 5.28% in pre-market trading on Tuesday, continuing the downward trend that began in after-hours trading on Monday. The significant drop comes in response to the company's announcement of substantial common stock and convertible notes offerings totaling $1.35 billion.

The drone and defense technology company revealed 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, as well as for general corporate purposes, including increasing its manufacturing capacity. However, the announcement has sparked concerns among investors about potential share dilution and increased debt burden.

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. J.P. Morgan and BofA Securities are leading the management of these offerings, with Raymond James also involved in the convertible notes offering. The company has granted underwriters a 30-day option to purchase additional shares and notes to cover over-allotments. The completion of these offerings remains subject to market conditions, adding an element of uncertainty to the situation.