Why AST SpaceMobile Stock Is Plummeting Today

Source The Motley Fool

Shares of AST SpaceMobile (NASDAQ: ASTS) were falling Thursday. The firm's stock is down 13.5% as of 2:00 p.m. ET, but it had lost as much as 16.4% earlier in the day. The move down came as the S&P 500 gained 0.2% and the Nasdaq Composite fell 0.2%.

Investors were unhappy with AST's proposal of a private offering.

Start Your Mornings Smarter! Wake up with Breakfast news in your inbox every market day. Sign Up For Free »

Fears of dilution

The company announced late Wednesday that it intends to offer $400 million in convertible senior notes due by 2032. The space-based broadband and cellular provider needs to raise serious cash to continue its quest to fill low earth orbit with its satellites. Having successfully launched just five, the company must launch significantly more to achieve the level of coverage that will make it competitive. Each is expensive, as the company relies on other companies like Blue Origen to build them and actually get them into space.

The private offering will help it raise the capital it needs, but it could lead to the devaluing of the Class A stock that investors already hold. AST will take measures to mitigate the effect using a maneuver known as a capped call transaction. How this plays out remains to be seen, but for now, investors are taking a more cautious approach.

What's next for Micron?

Dilution can be an issue, and this is unlikely to be the only time the company needs to raise significant cash, considering the cash-intensive business it's in, but the capital will allow the company to launch more satellites and drive revenue.

The potential value of AST's mission is immense. If you are a more risk-tolerant investor, AST can be a great part of your portfolio. Just be forewarned: there will be significant volatility along the way.

Johnny Rice 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.

Disclaimer: For information purposes only. Past performance is not indicative of future results.
placeholder
Natural Gas sinks to pivotal level as China’s demand slumpsNatural Gas price (XNG/USD) edges lower and sinks to $2.56 on Monday, extending its losing streak for the fifth day in a row. The move comes on the back of China cutting its Liquified Natural Gas (LNG) imports after prices rose above $3.0 in June. It
Author  FXStreet
Jul 01, 2024
Natural Gas price (XNG/USD) edges lower and sinks to $2.56 on Monday, extending its losing streak for the fifth day in a row. The move comes on the back of China cutting its Liquified Natural Gas (LNG) imports after prices rose above $3.0 in June. It
placeholder
Dogecoin Crash Signal Flashes: Analyst Warns Of A Potential 40% DropDogecoin (DOGE) holders have been put on alert by crypto analyst Ali Martinez (@ali_charts), who shared a chart on Monday highlighting a noteworthy technical setup. According to Martinez, the Market
Author  NewsBTC
18 hours ago
Dogecoin (DOGE) holders have been put on alert by crypto analyst Ali Martinez (@ali_charts), who shared a chart on Monday highlighting a noteworthy technical setup. According to Martinez, the Market
placeholder
Bitcoin Faces Persistent Resistance at $100K, Analyst Eyes Next StepWeeks after hitting an all-time high above $109,000, Bitcoin’s price remains under pressure. It is currently trading below the $100,000 mark, an 11.4% decrease from its peak. The crypto asset’s
Author  NewsBTC
2 hours ago
Weeks after hitting an all-time high above $109,000, Bitcoin’s price remains under pressure. It is currently trading below the $100,000 mark, an 11.4% decrease from its peak. The crypto asset’s
placeholder
Amazon, Microsoft, Alphabet, and Meta Just Gave Nvidia Great News. But Does That Make The Stock A Buy Before Feb. 26?The stock market appears to be in the middle of quite the storm as of late. In the final days of January, a Chinese start-up called DeepSeek sent shock waves around the world after
Author  The Motley Fool
2 hours ago
The stock market appears to be in the middle of quite the storm as of late. In the final days of January, a Chinese start-up called DeepSeek sent shock waves around the world after
placeholder
XRP Price Pump To $3.35 On The Horizon With Bullish Cup And Handle Pattern FormationThe XRP price is getting ready for a significant pump, as a new Cup and Handle pattern has just formed on its chart. A crypto analyst who identified the pattern has released an analysis, predicting that XRP could rise to $3.35, marking a new local high for the cryptocurrency. Cup And Handle Pattern To Trigger […]
Author  Bitcoinist
36 mins ago
The XRP price is getting ready for a significant pump, as a new Cup and Handle pattern has just formed on its chart. A crypto analyst who identified the pattern has released an analysis, predicting that XRP could rise to $3.35, marking a new local high for the cryptocurrency. Cup And Handle Pattern To Trigger […]
goTop
quote