Shares of Solaris Energy Infrastructure, Inc. (NYSE:SEI) tumbled 5.66% in after-hours trading on Monday, as investors reacted to reports of weak earnings quality and concerning financial metrics. The sharp decline comes after a detailed analysis revealed several red flags in the company's financial performance.

According to recent reports, SEI's earnings quality has come under intense scrutiny. While the company reported a profit of US$15.8 million for the year ending March 2025, it alarmingly burned through US$261 million in cash during the same period. This significant discrepancy between reported profits and free cash flow has raised serious concerns among analysts and investors.

Adding to the worries, SEI reported a high accrual ratio of 0.42, which typically bodes poorly for future profitability. Furthermore, the company has been actively diluting shareholder value by issuing 53% more new shares over the last year. This dilution has led to a 25% decline in earnings per share, despite the company's reported net income growth. The combination of weak cash generation, high accruals, and share dilution paints a troubling picture of SEI's financial health, prompting today's after-hours sell-off as investors reassess the company's prospects.