Joby Aviation’s announcement of a $1.2 billion capital raise triggered a 9.61% drop in its premarket trading session as market participants factored in the impact of dilution. The offering consists of $600 million in 0.75% convertible senior notes due 2032 and the sale of 52,863,437 new common shares priced at $11.35 each—a 15% discount to the prior closing price. Investors signaled concern over the nearly 20% increase in outstanding shares, even as the raise expands Joby’s cash runway through its anticipated certification and manufacturing scale-up phases.

The convertible notes will accrue interest semi-annually at 0.75% and mature on February 15, 2032, with mandatory conversion rights kicking in after November 17, 2031. Noteholders may convert at an initial rate of 70.4846 shares per $1,000 principal—equivalent to a $14.19 conversion price, representing a 25% premium over the $11.35 stock offering price. Joby can elect to settle conversions in cash, stock or a combination, and has secured capped-call transactions with a $22.70 cap price to mitigate dilution on conversions above that level. The company also retains options to redeem notes early if its share price sustains 130% of the conversion price.

Net proceeds are estimated at $576 million from the equity tranche and $582.9 million from the notes, before over-allotments. Joby plans to allocate approximately $55 million toward capped-call hedges and direct the balance, together with existing liquidity, toward certification milestones, manufacturing capacity expansion and pre-commercial operational build-out. Management projects the financing will extend the company’s cash runway into 2028, underpinning its strategy to achieve Federal Aviation Administration type certification and initiate revenue service in key urban markets.