Oxford Lane Capital Corp. (OXLC) Stocks: Net Loss Hits $120.8M Despite Strong Investment Income

TLDR

OXLC tanks 6% pre-market after $120M loss. Core income hits $95.8M on CLO growth. NAV dips to $4.32, more downside seen. Rising costs weigh on quarterly results New shares raise $300M, but spook investors.

Oxford Lane Capital Corp. stock closed higher at $4.88 on May 16, showing a 0.21% gain by market close. However, the momentum reversed in pre-market trading on May 17, with shares dropping 6.38% to $4.5688. This movement came ahead of the company’s earnings report, which revealed a $120.8 million net loss despite growth in core net investment income.

Oxford Lane Capital Corp. (OXLC)

Core Investment Income Rises Amid Portfolio Growth

Oxford Lane posted $95.8 million in core net investment income for the March 2025 quarter, translating to $0.23 per share. This figure reflects cash distributions from its collateralized loan obligation (CLO) equity investments, a key income source. Total investment income also grew to $121.2 million marking a $6.7 million increase from the prior quarter.

The company reported $115.3 million in income from CLO equity and warehouse positions and $5.9 million from CLO debt and other investments. This growth came as Oxford Lane increased investments by $526.2 million during the quarter. Consequently, sales and repayments totaled $136 million, reinforcing the firm’s capital deployment strategy.

Despite income improvements, total expenses rose to $45.8 million, up from $42 million in the previous quarter. The firm attributed this rise to increased portfolio activity. Yet, Oxford Lane focused on generating higher yields through strategic CLO allocations.

Net Asset Value Drops While Losses Weigh on Results

Oxford Lane’s net asset value (NAV) per share stood at $4.32 as of March 31, down from $4.82 at the end of 2024. The company estimated April NAV between $3.98 and $4.08, reflecting continued market pressure. Management clarified this was only a preliminary range and could differ from the June-end valuation.

The quarter recorded net realized losses of $8.5 million and unrealized depreciation of $187.7 million. These factors led to a $120.8 million net decrease in assets from operations. While core income remained solid, market volatility significantly impacted portfolio valuations.

Oxford Lane acknowledged that NAV and income estimates might change as financial closing procedures progress. The firm emphasized that its preferred shares maintain fixed dividends despite market fluctuations. These include 6.25%, 6.00%, and 7.125% dividend rates on Series 2027 and 2029 preferred shares.

Stock Issuance Supports Liquidity, but Market Reacts to Risk

Oxford Lane issued approximately 60.7 million shares through its at-the-market program during the quarter, raising $300.5 million. This boosted outstanding shares to 453.2 million as of March 31 and to 467.3 million by April 30. The capital raise aimed to support portfolio growth and income generation.

Despite the capital inflow, investor sentiment weakened following the earnings report and NAV guidance. The stock’s sharp pre-market decline signaled concern over rising losses and potential further depreciation. This cautious reaction highlights market sensitivity to valuation risks, especially in CLO-heavy portfolios.

Oxford Lane confirmed a conference call for May 19 to review its financial results and provide further clarity. Management reiterated the complexity of CLO accounting and the difference between GAAP and taxable income. The firm continues navigating income generation while managing valuation swings across its leveraged credit investments.

 

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