On Wednesday, Scotiabank confirmed its Sector Outperform rating and a stock price target of $12.90 for AST Spacemobile (NASDAQ:ASTS), following the company's announcement about a potential resale of shares.
The communication detailed the possibility of reselling 10.4 million shares, valued at approximately $103 million, as part of the Antares Reorganization that took place in March 2024. This reorganization involved the exchange of Class B shares held by the Cisneros family for Class A shares after the demise of Gustavo Cisneros in December.
Gustavo Cisneros was recognized for his early investment in AST Spacemobile, contributing $10 million in seed capital in 2018, acknowledging the substantial prospects of direct-to-cell services in global communications. The shares set for potential resale amount to 4.0% of the current shares outstanding, or 3.4% on a fully-diluted basis, which includes convertible notes and warrants.
The transaction is expected to increase the free float of AST Spacemobile on a fully-diluted basis to 51.0% from 47.5%. The value of the shares in question equates to 4.9 days of the average daily trading volume over the past month. Scotiabank's analysis indicates that this event will not alter the total count of shares and, as such, will not affect the firm's price target for AST Spacemobile.
Scotiabank also noted the potential for a trading opportunity if the share resale influences the stock's market price. The analyst's outlook remains unchanged, suggesting that the transaction presents a chance for investors should there be any temporary fluctuation in the share price due to the offering.
In other recent news, AST Spacemobile has seen significant developments in its strategic partnerships and financial outlook. UBS has adjusted its outlook on the company by increasing its price target from $7.00 to $13.00, maintaining its Buy rating. This decision is backed by encouraging regulatory developments and recent partner deals, including a strategic partnership with Verizon (NYSE:VZ), valued at $100 million, and a significant commercial agreement with AT&T (NYSE:T).
Scotiabank also raised its price target on AST Spacemobile to $12.90 from the previous $7.40, maintaining a Sector Outperform rating. The firm's upward revision was influenced by the recent Verizon deal and the anticipated impact of the upcoming satellite launches.
AST Spacemobile reported $31.1 million in non-GAAP adjusted cash operating expenses for the quarter and a cash balance of $212.4 million during its first quarter 2024 earnings call. The company is preparing to launch its first five Block 1 satellites in mid-2024. AST Spacemobile's strategic focus on partnerships, regulatory approvals, and financing underscores its commitment to establishing a Space-Based cellular broadband network.
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