Fabrinet Shares Surge After Amazon Deal

Fabrinet (NYSE:FN) shares rose 9% in pre-market trading despite the company's downward revision of its third-quarter adjusted earnings per share (EPS) forecast. The optical packaging and precision optical, electromechanical, and electronic manufacturing service provider now expects the adjusted EPS to range between $2.43 and $2.51, down from the previously anticipated range of $2.55 to $2.63.

This adjustment follows the issuance of a warrant to an Amazon (NASDAQ:AMZN) unit, allowing the purchase of up to 382,922 shares at an exercise price of $208.4826 per share. This transaction is expected to result in a cash-based stock compensation adjustment of approximately $4.2 million, leading to an estimated negative impact of about $0.12 on net income per diluted share in the third quarter. Despite the lowered EPS outlook, investors seem to respond positively to Fabrinet's pre-market movement, indicating confidence in the company's future.