re: ASTS, meme stock or real stock?

From Kevin Mak…

Fundamentally this convertible debt offering isn't bullish or bearish.

The company needs $2-4B over the next 3 years to build out the constellation. They aren't going to get all of it via ExIm non-dilutive financing. Most of it will come from equity issuances, debt issuances, and mixed (convertible) issuances. This isn't uncertain, this is a reality.

Exactly how they time out that fundraising is uncertain. "Do we take the money now, or do we announce x,y,z and hope the stock goes up and then issue shares later?" Obviously waiting for the price to be higher is more aggressive and beneficial but also more risky.

Given they were happily selling shares via the ATM at $30 just a few weeks ago, doing a convert for shares at $70+ is a very reasonable thing to do. It's also not crazy to wait 3 months and hope for a better price (and risk getting a worse price).

Abel's track record is to "take money while it's there, and take more money than you need, because you always need more money". So this isn't uncharacteristic at all. Some investors see them as having $1.5B of cash, other see them as needing another $1.5B of cash. The answer is both are true.

There's really not much to "read into" this event.

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Mechanically, this is essentially a share issuance and causes a supply/demand shock (about 6m shares coming into the market overnight to be sold). So the price falls to reflect that shock. That's not surprising, and also not bullish or bearish.

However, how aggressively the stock is bought or sold (buy the dip, or run away because the momo is gone) will be rather telling in the coming days about the investor sentiment around the stock. My best guess and positioning is the stock finds its footing and doesn't crater.