Oracle Just Sold $10 Billion of Stock at $116 a Share. Is the Stock a Buy at That Price?
The cloud giant maxed out its new four-year fundraising cap in five days. What did it cost shareholders?
Oracle sold $10 billion of stock at $116 per share in November, raising a total of $20 billion through a combination of shares and bonds. The stock is now trading around $116, near its lowest price in the past year and where the new shareholders purchased it. This sale represents about 3% more shares than initially anticipated at a $145 price point.
While dilution occurs, the cost per share is relatively low, with dividends adding around $172 million annually. However, Oracle's interest expenses have been rising, with the new notes adding over half a quarter's interest bill to the company's annual interest expense. The company's capital expenditures have also surged, with the $20 billion raise covering about 70% of its spending in a single quarter.
Despite this, Oracle expects strong revenue growth in the next few years, though positive free cash flow is not expected until the second half of fiscal 2028. Given the current price and the company's growth prospects, I would consider buying Oracle stock, possibly adding shares gradually.
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