Why AST SpaceMobile Stock Jumped This Week

AST SpaceMobile (NASDAQ: ASTS) stock closed out last week's trading with another run of substantial gains. The company's share price ended this Friday's session up 7.4% from the previous week's closing price. Meanwhile, the S&P 500 index rose 3.4% over the stretch.

The broader market saw strong bullish momentum this week as key geopolitical risk factors appeared to moderate and investors bet on an increased likelihood that the Federal Reserve will cut interest rates next month. Excitement surrounding defense applications for space-industry companies also helped push AST shares higher.

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AST SpaceMobile stock rises amid market momentum and defense buzz

The S&P 500 rose this week and set a fresh record on Friday as the ceasefire between Israel and Iran held and Federal Reserve officials made comments suggesting that the central bank could cut interest rates next month. Investors also poured into defense technology stocks, and AST had some notable news to share on that front.

AST announced, in collaboration with Fairwinds Technologies, this week that it had successfully demonstrated the first non-terrestrial network (NTN) tactical satellite communications capable of serving up high-throughput data transmissions for standard mobile devices. The test highlighted the network's capabilities in defense-related scenarios. At one point, AST stock was up 16.1% from the previous week's close, but shares pulled back due to valuation concerns and financing announcements from the company.

An analyst firm weighed in, and AST made some significant financing moves

On Wednesday, AST SpaceMobile announced that it had entered into an agreement to repurchase $225 million in 4.25% convertible debt notes set to mature in 2032. The company also said it would issue approximately 1.04 million incremental shares in correlation with the convertible notes it was buying back.

As part of the deal, the company is also moving to sell 9.45 million shares of new stock, priced at $53.22 per share, in a direct offering to the holders of the convertible notes. The deal will remove $225 million in debt from the company's balance sheet and cut the need to make $63.8 million in remaining interest payments.

Bank of America also initiated coverage on AST on Wednesday and assigned a neutral rating and a one-year price target of $55 per share on the stock. As of this writing, the firm's price target implies additional upside of roughly 11%. Bank of America's analysts see promise and large-market potential for AST's BlueBird satellite constellation, but they raised concerns about the outlook for the business's sales ramp. With the company trading at roughly 191 times this year's expected sales, some strong growth is already priced in.

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Bank of America is an advertising partner of Motley Fool Money. Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bank of America. The Motley Fool has a disclosure policy.