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AST SpaceMobile shares drop 54% as cash burn and dilution fears rise
MarketBeat Ratings says analysts project a $1.5 billion to $1.8 billion full-year cash burn, and the company raised $1.15 billion in 2034 convertible notes amid capped calls to limit dilution.
AST SpaceMobile’s stock has slid nearly 54% since it hit an all-time high on May 28, as the space-based cellular broadband company continues building its constellation of low Earth orbit BlueBird satellites, according to MarketBeat Ratings. The outlet points to both operational headwinds and potential catalysts tied to ongoing FCC testing and carrier partnerships.
A key concern is the speed at which AST SpaceMobile is spending cash. Analysts cited by MarketBeat Ratings forecast a full-year cash burn rate of between $1.5 billion and $1.8 billion, driven by research and development, vertically integrated BlueBird satellite production, and rocket launch service fees that SpaceX charges at about $55 million to $65 million per launch.
MarketBeat Ratings also highlights financing dynamics that could affect shareholders. In an July 15 Form 8-K filing, AST SpaceMobile said a $1 billion private offering of convertible senior notes due 2034 was meant to further vertically integrate and reduce reliance on third-party launch providers, while the company ultimately raised $1.15 billion.
The outlet adds that dilution is a focus for investors, even with mechanisms intended to soften it. MarketBeat Ratings says the convertible notes have an initial conversion price of $79.57 per share, but capped call transactions were designed to reduce potential dilution, with AST describing an effective conversion price of $149.20 and effective dilution of less than 2%, alongside heavy insider selling over the past 12 months.