AST SpaceMobile (ASTS) shares have been experiencing notable swings recently. The recent decline followed the space-based cellular broadband company’s announcement of a refinancing plan, which included issuing additional shares and repurchasing notes. Following the announcement, ASTS stock fell 9.24% on Wednesday but rebounded nearly 3% in pre-market trading on Thursday.
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For context, AST SpaceMobile develops a space-based cellular broadband network designed to deliver mobile coverage worldwide.
AST SpaceMobile’s Latest Updates
AST SpaceMobile announced a major convertible note offering, along with a linked share sale and note repurchase plan.
The company priced $1 billion of convertible senior notes due in 2036 with an initial conversion price of around $96.30 per share, about 22.5% above the last sale. At the same time, ASTS said it will, subject to market conditions, offer roughly 2 million Class A shares in a registered direct placement. The proceeds from this sale, combined with cash on hand, will be used to repurchase up to $50 million of its outstanding 4.25% convertible senior notes due 2032.
Overall, the move strengthens the company’s capital base but could dilute existing shareholders. As a result, the stock went down after the announcement.
Why Is AST SpaceMobile Raising Funds?
AST SpaceMobile stated that it plans to use the money from its offering for general business purposes, including expanding its global satellite network into new strategic markets for its SpaceMobile service.
Notably, the company is creating a space-based cellular network that connects directly to regular mobile phones without any changes. It uses AST SpaceMobile’s large patent and IP portfolio and is meant to serve both commercial and government customers.
Is ASTS Space Mobile a Good Stock to Buy?
Turning to Wall Street, analysts have a Hold consensus rating on ASTS stock based on two Buys, three Holds, and two Sells assigned in the past three months. Furthermore, the average AST SpaceMobile stock price target of $56.98 per share implies 20.14% downside risk.
