AXT Inc. (AXTI) shares started Monday on an upward trajectory before pulling a U-turn, trading lower after the semiconductor materials company announced details of its $87 million public offering.

The Offering Details: AXT priced 7,098,492 shares at $12.25 each, which should generate gross proceeds of roughly $87 million before accounting for underwriting discounts, commissions and the usual offering expenses that come with raising capital.

So where's the money going? The bulk of the net proceeds will fund increased manufacturing capacity at the company's subsidiary, Beijing Tongmei Xtal Technology Co., Ltd. The focus there is ramping up production of indium phosphide substrates for export. Beyond that, AXT earmarked funds for research and development of new or improved products, plus general corporate purposes and working capital.

Market Reaction: At the time of writing, AXT shares were trading 3.45% lower at $14.84. The stock's reversal puts it among the day's weaker performers, illustrating how dilutive offerings can dampen investor enthusiasm even when the capital raise is intended for growth initiatives.