What happened 

Shares of solar microinverter supplier Enphase Energy Inc. (NASDAQ:ENPH) fell as much as 12.9% in trading Wednesday after the company announced a debt offering. At 12:30 p.m. EDT shares were still down 8.2% on the day. 

So what

After the market closed yesterday, Enphase announced a $60 million offering of convertible notes due 2023. This morning, it announced the offering had been priced with a 4% interest rate and would convert to stock at $5.56 per share. 

Large roof with solar panels.

Image source: Getty Images.

Management didn't define exactly what the funds will be used for, except to say they would be for general corporate uses. 

Now what

Raising money isn't necessarily a bad thing for a company, but investors can see a downside because it often dilutes their shares. Since the offering can be converted to stock at a predefined price, it will inherently reduce upside for investors if Enphase's stock continues to rise. That's why shares are falling today. 

I wouldn't worry about the drop, because it doesn't fundamentally change the story of Enphase Energy. And it will help fund the company's sales and manufacturing expansion surrounding new microinverter products. But today, the potential dilution isn't pleasing investors and that's why the stock is down.