Oracle (ORCL) announces a $20 billion equity distribution agreement to sell shares over time. Move comes amidst cloud infrastructure expansion and heightened scrutiny over leverage. Stock has dropped 28% this year due to bondholder lawsuit, analyst downgrades, and less favorable AI infrastructure spending.

Equity distribution agreement allows Oracle to sell up to $20 billion in common stock. Company also plans to raise $5 billion through mandatory convertible preferred bonds. Record demand for $25 billion bond offering. Oracle aims to raise between $45 billion and $50 billion to support cloud infrastructure expansion.

Oracle’s decision to tap the equity market aims to limit borrowing and ease debt concerns. Company reassures investors by stating it does not expect to issue additional debt in 2026. Analysts estimate over 100 million new shares could be added to the market, leading to shareholder dilution. Oracle remains confident in its cloud backlog, emphasizing future revenue growth.

Worries persist over Oracle’s ability to convert backlog into revenue and concentration of future revenue among a few customers. Company aiming to fund cloud infrastructure expansion to meet demand from major tech players. Analysts and investors closely monitoring Oracle’s strategic moves. Oracle (ORCL) shares are declining but may be becoming undervalued. Analysts remain bullish, with 29 rating it a “Strong Buy.” The average price target is $300.94, suggesting potential for significant growth. Consider buying if stock stabilizes around $150, or wait for $100-$130 range for potential entry point.

Read more at Yahoo Finance: Oracle Is Selling $20 Billion in Common Stock. What Does That Mean for ORCL, and Should You Buy Shares Now?