Why AST SpaceMobile Stock Sank This Week
Key Points
AST SpaceMobile stock fell after the company announced plans for a new round of fundraising.
The company could wind up issuing up to $1 billion in new convertible debt notes.
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AST SpaceMobile (NASDAQ: ASTS) stock lost ground over the last week of trading even though the broader market saw bullish momentum. The satellite communications company's share price ended the week's session down 11.7% from the previous week's market close. Over the same stretch, the S&P 500 gained 1.9%, and the Nasdaq Composite climbed 2.3%.
On Oct. 21, AST announced that it was considering raising funds through a new private stock sale. The threat of stock dilution and new debt sent the company's share price tumbling.
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AST stock sinks on dilution concerns
AST published a press release last Tuesday announcing plans to sell $850 million in convertible senior notes to raise new funding. The notes would come due in 2036 and would be redeemable for shares of the company's common stock. Additionally, AST said that the proposed deal would allow the group of initial convertible note purchasers to buy an extra $150 million in notes within 13 days after the first round of the notes being issued.
AST then confirmed it was moving forward with the fundraising move. While a new injection of capital would help the company fund its operations and growth bets, some existing shareholders understandably weren't thrilled about the potential for a combination of new debt and share dilution.
What's next for AST SpaceMobile?
AST SpaceMobile has a promising position in the commercialization of space and has seen explosive valuation growth this year as excitement around the trend has skyrocketed. Despite a valuation drawdown over the last week of trading, AST's share price is up 249% across 2025's trading.
With new use cases for the private sector, military applications, and other public-sector use cases, AST could have a very strong growth trajectory over the long term. On the other hand, the stock is already valued at approximately 336.5 times this year's expected sales and comes with a high degree of risk.
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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