Shares of lithium miner Albemarle are falling because the company is raising more capital, and shareholders are wary of the potential dilution.

Monday evening, Albemarle announced it was selling up to $2 billion in depositary shares that represent a 1/20th interest in a share of series A mandatory convertible preferred stock.

The wording might seem a little odd but, essentially, the company is offering new convertible preferred stock. The conversion premium, dividend, and other terms will be determined when the deal prices.

Albemarle shares are down 7.4% in premarket trading, at $123.30 apiece, while S&P 500 and Nasdaq Composite futures were off 0.3% and 0.6%, respectively.

Capital spending “requirements virtually demand this capital raise,” wrote Piper Sandler analyst Charles Neivert in a Monday report. “Shares are likely to be under significant pressure on this news, which in our view indicates an inability to fund these projects considering the current and possible near-term future pricing for lithium products over the next two years.”

Lower lithium pricing is pressuring cash flow. Benchmark lithium prices are off about 70% over the past 12 months, falling to roughly $15,000 per metric ton. Wall Street projects a cash use of about $400 million in 2024.

Lower lithium pricing pressures share prices too. Coming into Tuesday trading, Albemarle stock was off about 49% over the past 12 months.

Cash from operations, before capital spending, is expected to be roughly $1.3 billion. Albemarle expects to spend about $1.7 billion on plants and equipment in 2024.

Newsletter Sign-up Neivert rates Albemarle stock at Sell with a $122 price target. He is more bearish than the average analyst. Overall, 62% of analysts covering Albemarle have Buy ratings, according to FactSet. The average Buy-rating ratio for stocks in the S&P 500 is about 55%.

The average analyst price target for Albemarle stock is about $150.