Why AST SpaceMobile Stock Just Went Up 5%

In a column this morning, I argued AST SpaceMobile (ASTS 12.94%)the former special purpose space acquisition company (SPAC) that now aims to build a constellation of 168 communications satellites costing at least $3 billion should sell a lot of stock quickly to raise the cash it needs he needs

A few hours later came AST’s reply: “No thanks. We are good”.

I’m paraphrasing, but that’s what the AST announcement boils down to. With $440 million in pro forma cash on hand, AST says it has all the money it needs to move its business forward this year. Investors, buoyed by the news, bid AST shares up 4.9% by 10:25 a.m. ET.

AST receives a cash infusion

Yahoo! Financials put AST’s cash reserves at $285 million (versus $212 million in debt). But as management explained in this morning’s interim business update, it has already received $71 million from a repurchase mandate announced a week ago and expects to receive another $84 million by the end of of the redemption period, on September 27.

In total, this represents $155 million in new cash, bringing AST’s bank account to $440 million. In addition, management says it may take on up to an additional $51.5 million in debt under its secured credit facility.

What this means for AST SpaceMobile

AST says these funds will cover “short-term operational initiatives” and also cover interest obligations on the company’s debt – and even allow it to pay down some of its convertible debt, limiting future stock dilution.

The result: “We continue to have no plans to raise capital in an underwritten public offering until at least the end of 2024.”

This makes sense. In its March 2024 10-K filing with the Securities and Exchange Commission (SEC), AST said $350-400 million should be enough to build and launch the next 20 BlueBird Block 1 satellites in the lineup yes, so $440 million should cover that cost.

True, the company will need more money soon after. But it looks like AST has decided to cross that bridge when it comes to him.