Shares of Nebius Group plunged as much as 17.5% on August 19 after the Amsterdam-based AI cloud company announced a $4.5 billion convertible-notes offering — its second massive debt raise in five months. The deal, which would let bondholders convert their debt into stock at a future premium, forces investors to weigh explosive revenue growth against an increasingly leveraged balance sheet and the prospect of significant ownership dilution.
Another Huge Capital Raise, Just Months After the Last One. The offering consists of two series: $2.75 billion in notes due 2030 and $1.75 billion due 2034 , with an option for initial purchasers to buy up to an additional $675 million . This follows the March 2026 closing of an approximately $4.3 billion convertible-note deal . If the latest offering is fully exercised, Nebius will have raised roughly $9.5 billion in convertible debt this year alone. Total debt already stood at about $8.5 billion as of June 30, against $8 billion in cash , meaning net debt is already negative and growing.
Revenue Is Soaring, But So Is the Cash Burn. Q2 revenue grew 454% year over year to $582 million , and management reaffirmed $3–$3.4 billion in 2026 full-year revenue guidance with a ~40% adjusted EBITDA margin . The problem: capital expenditures hit roughly $5.7 billion in Q2 alone , dwarfing revenue. Free cash flow over the trailing twelve months was negative $5.9 billion . Convertible debt is the bridge until revenue scales to cover the infrastructure buildout.
Dilution Math That Should Worry Shareholders. Convertible notes are essentially IOUs that can turn into new shares if the stock price rises above a set threshold, watering down existing owners' stakes. Nebius had 271.9 million shares outstanding as of June 30 , and the count has already risen 22% in one year . The company also plans to exchange portions of existing 2029 and 2031 convertible notes for Class A shares , adding further share-count pressure. The cumulative conversion potential from all outstanding notes could meaningfully dilute per-share economics.
Investor Confidence Hangs on Execution, Not Just Growth. Nebius has secured over $40 billion in customer commitments , suggesting robust demand. But short interest sits at 60.2 million shares — nearly 22% of the float — a sign many sophisticated investors remain skeptical. Key risks include potential growth deceleration in 2027 and ongoing dilution to fund aggressive spending . The central question: whether Nebius can convert billions in infrastructure into self-sustaining cash flow before its capital structure becomes a bigger story than its growth rate.