AST SpaceMobile (NASDAQ:ASTS) stock is taking a beating on Wednesday after the satellite company priced an upsized share offering.
According to a press release from the company, it’s selling a total of 12.5 million shares of ASTS stock for gross proceeds of $59.4 million. There’s also a 30-day option for sole underwriter Barclays to purchase up to an additional 1.875 million shares.
AST SpaceMobile notes that this stock offering will have the underwriter selling shares from time to time. That includes through the Nasdaq, “in the over-the-counter market, through negotiated transactions or otherwise at market prices prevailing at the time of sale.” ASTS doesn’t say what it plans to do with the funds from the offering.
News of the public stock offering has roughly 1 million shares of ASTS trading hands as of this writing. That’s still below the company’s daily average trading volume of about 2.2 million shares.
What This Means for ASTS Stock
A public stock offering means that AST SpaceMobile is increasing its total number of outstanding shares. That’s not something investors often react well to as it erodes current stakes in the company. That’s probably part of the reason for ASTS stock falling today.
Additionally, it’s possible that ASTS stock may be offered in sales below its market value. That’s another concern for investors as it could devalue the stock from its current market price. However, no such transactions have been announced just yet.
ASTS stock is down 27.9% as of Wednesday morning.
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On the date of publication, William White did not hold (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.
