Navitas Semiconductor Corp (NVTS) stock is trading lower on Friday. The drop comes as traders lock in profits following a massive 266% year-to-date rally, alongside emerging concerns regarding stock dilution.

Nasdaq futures are down 0.97% while S&P 500 futures have shed 0.39%.

Heavy Profit-Taking After Massive AI Rally

The semiconductor company experienced a meteoric rise earlier this year, heavily driven by its high-profile collaboration with NVIDIA Corp MGX ecosystem to accelerate next-generation 800 VDC AI infrastructure. However, following a 266% year-to-date surge, investors are aggressively taking profits on Friday, putting downward pressure on the equity.

SEC Filing Reveals Multi-Million Share Issuance

Compounding the profit-taking pressure, Navitas filed a Form 8-K with the U.S. Securities and Exchange Commission (SEC) on Thursday.

The filing detailed that the company issued an aggregate of 3,283,844 shares of Class A common stock on Thursday. The issuance fulfilled remaining obligations under a 2021 Business Combination Agreement for "Triggering Event I" and "Triggering Event II."

Dilution Concerns Impact Sentiment

According to the official SEC report signed by CEO Chris Allexandre, Navitas has now issued 6,561,282 total shares under this legacy agreement.

Furthermore, former stockholders still hold a "contingent right to receive up to a total of 10 million shares of Class A common stock" if specific price targets are hit before October 19.

This potential supply influx has stoked near-term dilution fears among traders.

Critical Technical Levels for NVTS to Watch

Even with Friday's pullback, NVTS remains in a strong longer-term uptrend: it's trading 22.4% above its 20-day SMA ($24.22) and 171.5% above its 200-day SMA ($10.92), which tells you the move has been powerful and extended. The 20-day SMA is also above the 50-day SMA, and the 50-day SMA is above the 200-day SMA (a golden cross), keeping the trend structure bullish.

The key technical question is whether the stock can hold above its short-term trend gauges (the 20-day SMA/EMA around the mid-$24 area) if selling continues after the open, because that's where dip-buyers often defend in strong uptrends.

NVTS Price Action: Navitas Semiconductor shares were down 10.47% at $27.46 at the time of publication on Friday.