The reason behind the 12% decrease in AST SpaceMobile's stock value.
The reason behind the 12% decrease in AST SpaceMobile's stock value.
AST SpaceMobile (ASTS 2.48%) saw its stock plummet by 12.5% before midday ET on Friday following the company's dismal Q3 2024 earnings report.
Analysts had predicted a $0.23-per-share loss for AST, a pioneer in direct-to-cell (satellite) mobile communication services. However, AST shockingly announced a loss of $1.10 per share instead.
AST SpaceMobile's Q3 financials
AST CEO Abel Avellan commenced the report celebrating the company's recent achievements, such as the successful launch of its five BlueBird satellites and their subsequent unfolding and initiation of preliminary operations. Avellan also noted AST's pursuit of license approval from the Federal Communications Commission to commence beta services with major carriers like AT&T (T -0.65%) and Verizon (VZ -0.15%).
Furthermore, AST has sealed launch agreements with various providers, with plans to put up to 60 more BlueBird satellites into orbit by 2025 and 2026.
Although things are progressing according to plan, AST is nowhere near realizing profits yet.
What's on the horizon for AST?
Prior to registering profits, AST must first get those satellites into orbit and bear the corresponding expenses. Estimated at around $20 million per satellite to build and launch, launching 60 BlueBirds could cost up to $1.2 billion.
Currently, AST has $519 million in cash reserves. Management hopes that additional customer prepayments will address the shortfall. But with no revenue yet, investors must anticipate AST will likely need to sell an unspecified amount of shares to raise the $700 million it currently lacks.
Approximately 28 million new shares may be required at $24 per share to generate the necessary funds, potentially weakening existing shareholder stake by around 14%.
While management hasn't announced it yet, you should likely consider this as a possibility.
Despite the financial challenges, AST SpaceMobile is actively seeking to secure investments to bridge its funding gap. The company might need to engage in additional fundraising efforts, potentially involving the sale of new shares, which could impact the existing shareholders' stake in the finance of the company.
Investors interested in the satellite communication sector might want to closely monitor AST's financial strategies for investing opportunities, considering the potential impact of such fundraising on the company's share price.