NextDC Ltd (ASX: NXT) shares are seesawing today after the data centre operator released an update before market open.
During early morning trade, the NextDC share price is down 0.27% to $14.91. By comparison, the S&P/ASX 200 Index (ASX: XJO) is down 0.5% to 8,744 points.
The move comes after a strong run last week, with the stock up almost 8% following its record contracted utilisation update.
Let's take a closer look at the latest announcement.
Imge source: Getty Images
Retail offer opens
According to the release, NextDC has opened its retail entitlement offer as part of the capital raise announced earlier this month.
The offer is priced at $12.70 per new share, which sits 15% below the current market price.
Eligible shareholders can take up one new share for every 5.4 shares held.
The retail component is expected to raise around $500 million, on top of the successful institutional raise that has already been completed.
That institutional portion brought in roughly $1 billion, taking the total raise to approximately $1.5 billion.
The retail offer is scheduled to close on 11 May.
Why NextDC is raising capital
NextDC said the raise is tied to funding the next stage of expansion across its data centre network.
Management pointed to a lift in contracted customer demand, with an additional 250MW secured.
That takes contracted utilisation up significantly and feeds into a larger forward order book.
The pipeline is expected to lift earnings as more capacity moves from build into billing over the coming years.
Proceeds from the cap raise are expected to fund further development, particularly across NextDC's hyperscale sites.
Demand continues to build
NextDC is still seeing strong interest from large customers, particularly across cloud and AI.
This is starting to show up in longer-term contracts, giving more visibility as new capacity comes online.
The company is also lining up funding beyond equity, including debt and hybrid securities, giving it more room to keep expanding.
Foolish Takeaway
While there's nothing really surprising in today's update, it shows how quickly things are moving.
NextDC is raising capital to build more capacity, and the pipeline is there to support it.
The latest numbers point to continued growth, particularly across its larger customers.
At the same time, new shares are being issued below the current price, which means dilution could weigh on the share price in the short term.
Until then, the stock may have a tough time climbing back to its late 2025 highs.
