Key Points
A series of financial maneuvers had shareholders selling.
The moves reminded investors that the company still needs plenty of additional capital.
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AST SpaceMobile (NASDAQ: ASTS) announced plans to raise money this week, and some shareholders decided to dump the stock. The financial engineering it announced was the focus for investors who may see more volatility next week.
Shares plunged 18.9% for the week, according to data provided by S&P Global Market Intelligence.
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Shareholder dilution coming
In a series of announcements this week, AST SpaceMobile said it plans to repurchase about $300 million of its existing convertible senior notes due in 2032, while concurrently offering about $1 billion of new notes due in 2036. The transactions were viewed negatively by existing shareholders for several reasons. Both offerings are expected to occur next week.
While the move will remove $300 million of debt -- and save over $50 million in interest payments -- it will result in approximately 1.15 million additional shares being issued by the company. It's also a reminder that AST SpaceMobile still needs to spend much more capital to finish building out its satellite array to offer broadband directly to smartphone users.
The company said it will use some of the additional capital for "accelerating the deployment of AST SpaceMobile's controlled spectrum bands on a global basis," as well as to pursue other future business growth opportunities.
Existing shareholders will take a hit, though, potentially from more than just direct dilution. With shares already about 32.5% off 2026 highs, the company warned that the common stock could see "substantial" volume impacts as note holders may need to buy or sell AST stock to cover derivative transactions or other positions related to the notes.
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Howard Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AST SpaceMobile. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
