After the market closed on Monday, management announced a proposed offering of common stock, and the size of the deal was revealed this morning: $20.6 million in stock will be sold, and underwriters will offer shares on the public markets or through negotiated transactions. The stock dropped because shareholders are pricing in a lot of dilution.
In addition to the public offering, CEO Paul Prager and other existing investors have agreed to buy $5 million of the stock for $7.88 per share. This was likely intended to hold up the stock price, but obviously that didn't work today.
Stock sales are often looked at unfavorably by investors, but the drop in TeraWulf's shares today is a little extreme, especially when you consider that the CEO is putting a sizable amount of capital to work. I'll also note that Bitcoin was actually up slightly over the last 24 hours, so investors can't even point to that as a cause for the drop.
I think this is actually a good opportunity for investors looking at TeraWulf stock. The reaction to this stock sale looks extreme, and if management is willing to buy at a higher price than shares are trading at today, they see the stock as undervalued.