DigitalOcean Holdings, Inc. (DOCN) saw its stock price plummet 5.60% in pre-market trading on Monday, following the company's announcement of a proposed convertible senior notes offering. This significant drop reflects investors' immediate reaction to the potential dilution of existing shares and increased debt load for the cloud infrastructure provider.

The company disclosed its intention to offer convertible senior notes, although the size and terms of the offering were not specified in the initial announcement. Convertible notes are a form of debt that can be converted into equity, which often leads to concern among current shareholders about potential dilution of their ownership stake.

While DigitalOcean has not yet provided details on how it plans to use the proceeds from this offering, such moves are typically aimed at raising capital for growth initiatives, acquisitions, or refinancing existing debt. However, the market's negative reaction suggests that investors are wary of the potential long-term impact on the company's financial structure and share value.