Why is Oracle stock down? A $20B sale at $116 a share

Why is Oracle stock down? Oracle fell 8.76% on Monday, November 2, to close at $119.22, the day it launched a $20 billion sale of new stock and bonds. By evening the sale had priced: Oracle's release says it sold 86,206,897 shares at $116.00 each, plus $10 billion of notes.

The drop is bigger than one day. Oracle had closed at $144.54 on October 28, the day of its investor day, and at $130.67 on October 30. Yahoo Finance's quote data (read at 06:51 UTC on November 3) shows the November 2 close as the lowest of those five sessions, 17.5% below the October 28 close by our arithmetic.

What Oracle sold

Oracle filed the plan on the morning of November 2. The preliminary prospectus supplement, filed at 08:16 Eastern, offered $10 billion of common stock and left the price blank. Our earlier article on the filing has the details.

Oracle's pricing release came the same day. It lists the terms:

• Stock: 86,206,897 shares at $116.00, for net proceeds of about $9.9 billion after underwriting discounts and expenses.
• Notes: $10 billion in five tranches, with net proceeds of about $10.0 billion.
• Closing: both sales are expected to close on November 4, 2026, subject to customary conditions. Neither depends on the other.
• Use of money: general corporate purposes, which Oracle says may include capital spending, repaying debt, future investments or acquisitions, dividends and share repurchases.

The $116.00 price is 11.2% below the $130.67 close on October 30, which the prospectus used as its placeholder, and 2.7% below the November 2 close.

The bonds carry high interest rates

Oracle's final pricing term sheet, filed with the SEC on November 2, gives the notes:

The term sheet lists expected ratings of Baa2 with a negative outlook from Moody's, BBB- with a stable outlook from S&P, and BBB with a stable outlook from Fitch. BBB- is the lowest investment-grade rating on S&P's scale.

Why selling stock pushes a share price down

A stock sale adds shares. The prospectus said about 3.10 billion shares would be outstanding after a sale of 76.5 million shares at $130.67. Subtracting that, Oracle had roughly 3.02 billion before. The 86.2 million shares actually sold would be about 2.9% more, by our arithmetic. Investors who hold shares own a slightly smaller slice of the company, and the new shares were priced below the market.

The market was also reacting to the size and cost of the raise. CNBC reported that the plan was first previewed at the investor day, and quoted Baird analyst Rob Oliver saying it was "exactly what they previewed." The same CNBC story had UBS analyst Karl Keirstead calling the news a relief given worries about debt markets. Those are their views, not ours, and the filings do not say why the stock moved.

What we don't know yet

Oracle's release does not say what share of the money goes to data centers and what share to debt. Whether the sales close on November 4 as expected will show in later SEC filings. The stock price after the offering will be set by trading, and we are not forecasting it.