Ceva (NASDAQ: CEVA) had a tough week, announcing a new capital raise that caused its stock to drop more than 22%. The company priced a secondary share issue of 3 million shares at $19.50 per share, granting underwriters an option for 450,000 more shares. The proceeds will be used to increase financial flexibility and explore acquisitions.

The capital raise will potentially dilute existing shares, with 3.45 million new shares impacting the existing float. Despite being an AI company, Ceva operates in a promising niche. Investors are cautious about AI companies, so it’s crucial to monitor how effectively Ceva uses the proceeds from the share offering.

The Motley Fool Stock Advisor team didn’t include Ceva in their list of 10 best stocks to buy now. Previous recommendations like Netflix and Nvidia have seen significant returns. Investors should consider the potential for returns before buying Ceva stock, given the current market conditions.

Read more at Yahoo Finance: Why AI Stock Ceva Was Sliding Hard This Week