Alphawave’s shares took a steep fall following the announcement of its $150m bond raise, indicating market scepticism.
- The bonds, carrying a 3.75% interest rate, are aimed at bolstering research and growth.
- Forecasted revenues were adjusted downward due to a merge of key clients in Korea, impacting earnings.
- A strategic shift has resulted in a notable decrease in sales, primarily due to changes with Chinese partnerships.
- Despite the setbacks, Alphawave is advancing its technology investment, expecting future growth.
In a stark market reaction, Alphawave’s share price fell by as much as 20% after announcing a $150m convertible bond raise. The company revealed plans to utilise the funds for research and development, capital expenditures, and general corporate purposes, potentially including debt repayment. These bonds, issued at par, offer a 3.75% annual coupon rate, payable semi-annually starting March 2025 until 2030.
Alphawave adjusted its revenue projections for the year, scaling back from $345m-$365m to $310m-$330m. This reduction is attributed to a merger between two significant AI clients in Korea, which consolidated ongoing development programmes. Yet, Alphawave highlighted robust bookings, reporting a 20% increase compared to the previous year.
The company’s revenue for the first half of the year was $91m, marking a significant 51% drop from the previous year. This downturn is largely due to strategic changes in business focus, notably reducing reliance on legacy business in China and shifting towards IP licences and silicon products.
Financial challenges have intensified as Alphawave’s losses soared to $40m, and debt grew by 42% to $142m. The company cited increased investments in developing chiplets and new silicon connectivity products as a cause, with production ramping up anticipated in 2025. The company, established in 2017, operates in Toronto and London, maintaining a global presence in Europe and Asia with over 800 employees.
While facing immediate financial strains, Alphawave continues to invest heavily in its future technological advancements.
