Senmiao Technology Limited (NASDAQ:AIHS) saw its stock collapse 22.8% on Friday after unveiling a new registered direct offering that will significantly dilute existing shareholders.
The company said it has entered into a securities purchase agreement with accredited investors to issue 1,350,000 shares of common stock alongside pre-funded warrants for another 905,000 shares, all priced at $1.26 per share. The deal is expected to bring in roughly $2.8 million in gross proceeds.
Separately, Senmiao plans to issue warrants in a private placement that would allow holders to buy up to 4,510,000 shares of common stock—subject to stockholder approval. These new warrants will carry a 5.5-year term and an exercise price of $1.26.
The company intends to hold a special shareholder meeting within 45 days of closing the primary share sale, which is anticipated around November 17, 2025, pending standard closing conditions.
Senmiao said the proceeds will be used for general corporate and working capital needs. The sharp drop in its stock price reflects investor unease about the substantial dilution expected from the expanded share count.