Oracle shares tumble 11% on $18 billion debt raise and cash concerns
Oracle shares fell 11% on Wall Street after the company announced an additional $18 billion bond issuance late Tuesday to fund its AI data-centre buildout, pushing gross debt to $119 billion.
In an SEC filing late Tuesday, Oracle disclosed an eight-tranche bond issue with maturities of 5 to 30 years, with JPMorgan, BofA Securities, Citigroup and Wells Fargo as joint book-runners. Operating cash flow stood at $4.1 billion last quarter while capital expenditure reached $22.4 billion.
Wedbush analyst Dan Ives told clients that "the $300 billion Stargate deal with OpenAI carries enormous revenue potential, but the cash burn rate is what is unsettling investors." Bernstein analyst Mark Moerdler cut his rating to market-perform and lowered his price target from $195 to $168. The Information reported that KKR and Cerberus are in talks for a possible minority stake in Oracle Cloud Infrastructure.
Oracle is now down 23% year-to-date, diverging sharply from the S&P 500's 4.8% gain. ORCL closed Tuesday at $168.40, leaving the market capitalisation at $470 billion. This is not investment advice.
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