Why Is AST SpaceMobile (ASTS) Stock Down 13% Today?


  • AST SpaceMobile (ASTS) stock is tumbling 13%.
  • The company announced that it would sell $13.6 million in additional shares of its stock.
  • The news is probably causing some owners of the shares to sell them.
ASTS stock - Why Is AST SpaceMobile (ASTS) Stock Down 13% Today?

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AST SpaceMobile (NASDAQ:ASTS) stock is tumbling 13% after the company announced that it would sell 13.6 million additional shares of its stock for $5.50 per share. AST’s stock closed yesterday at $6.34.

AST operates a “space-based cellular broadband network for mobile phones.” The company only just recently set up its first BlueWalker 3 satellite array after launching the satellite earlier in the year.

Additional Information About the Offering

The news is likely sparking concerns among the owners of the stock because, by selling 13.6 million new shares, the company is reducing the value of its existing stock. The latter phenomenon is called “dilution.”

Moreover, the fact that AST sold the shares for significantly less than the price at which they closed yesterday is probably another major factor behind AST’s huge decline today.

The company expects to generate gross proceeds of roughly $75 million to $86n million from the deal. The gross proceeds do not factor in “underwriting discounts, commissions and other offering expenses,” AST noted.

More About AST SpaceMobile and ASTS Stock

In SEC filings, AST SpaceMobile noted that it would have to invest funds in creating and launching its satellites, along with “buying raw materials, testing, and increasing its repair and maintenance capabilities,” MobileWorldLive reported.

Among AST’s partners are AT&T (NYSE:T) and Vodafone (NASDAQ:VOD), a major European telecom company.

Last quarter, AST’s revenue jumped 70% year-over-year to $4.17 million. It ended the quarter with nearly $200 million in cash.

As of Nov. 11, the short interest in the shares was 25%, leading to speculation that the name could undergo a short squeeze.

Heading into today, ASTS stock was down 20% this year and had slumped 47% in the last three months.

AST was founded in 2017 and launched its initial public offering, or IPO, last year.

On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been PLUG, XOM and solar stocks. You can reach him on Stocktwits at @larryramer.

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