Ondas Holdings Inc. (ONDS) shares took a tumble Monday, and the culprit is pretty straightforward: dilution. The company just closed a sizable registered direct offering that brought in nearly $1 billion, but it came at the cost of issuing a whole lot of new shares.

Here's what went down. Ondas sold 19 million shares of common stock and pre-funded warrants for up to 41.79 million additional shares to a single institutional investor. That's 60.79 million common stock equivalents hitting the market all at once. And that's not even the full story—the deal also includes warrants that could eventually add another 121.58 million shares if the buyer decides to exercise them.

The pricing wasn't bad from the company's perspective. Common stock and accompanying warrants were priced at $16.45 per unit, while pre-funded warrants and their accompanying warrants came in at $16.4499. Both prices represented about a 17.5% premium over where Ondas closed on January 8, 2026. So at least the company didn't have to fire-sale its equity.

The Dilution Dilemma

Ondas expects to pocket roughly $959.2 million in net proceeds after deducting fees and expenses. If all those warrants get exercised for cash down the road, the company could haul in an additional $3.4 billion. The warrants carry a $28 exercise price, can be exercised immediately, and don't expire for seven years.

But here's the rub for existing shareholders: that's a lot of new shares flooding the market. The immediate dilution from 60.79 million shares is substantial, and the possibility that another 121.58 million could materialize if those warrants get exercised is hanging over the stock like a cloud. It's no wonder investors are taking profits today.

Can This Rally Keep Going?

Despite Monday's pullback, Ondas is still riding a remarkable wave. The stock is trading 32.2% above its 20-day simple moving average, 57.4% above its 50-day SMA, and a whopping 180.7% above its 200-day SMA. That's the kind of momentum that turns heads.

The RSI currently sits at 71.01, which puts it firmly in overbought territory. Translation: the stock's been on a tear, but it might be due for a breather. Meanwhile, the MACD remains above its signal line, confirming bullish momentum is still intact—though traders should watch for any signs that momentum is starting to fade.

There aren't any clearly defined support or resistance levels at the moment, which means volatility could be the name of the game going forward. Over the past 12 months, Ondas has rocketed 593.61%, a truly spectacular run that underscores just how strong this trend has been.

ONDS Price Action: Ondas shares closed Monday down 3.65% at $13.41.