TeraWulf Inc. (NASDAQ:WULF) saw a 7.06% drop on Tuesday as investors sold off positions before the mandatory conversion of preferred shares into common stock on December 9. The conversion could result in potential dilution, with fractional interests paid in cash.

The conversion is in accordance with a Certificate of Designations filed on March 16, 2022. Under Section 10c of the Certificate, TeraWulf has the option to convert outstanding convertible preferred stocks into common shares if certain conditions are met, focusing on growth and financial discipline.

TeraWulf Inc.’s CFO, Patrick Fleury, sees the conversion as a key step in simplifying the company’s capital structure and supporting future growth, providing transparency to investors. While WULF may have potential, other AI stocks may offer higher returns with limited downside risk. Check out our free report on the best short-term AI stock.

Read more at Yahoo Finance: TeraWulf (WULF) Falls 7% on Potential Dilution of Mandatory Preferred Share Conversion