Due Diligence Capital Notes

On February 10, 2026, a satellite the size of a studio apartment unfolded its antenna in orbit roughly 500 kilometers above Earth. The array stretched across approximately 2,400 square feet — larger than many New York loft apartments — and the company behind it, AST SpaceMobile, called it the largest commercial communications array ever deployed in Low Earth Orbit. One day later, the same company filed a prospectus supplement with the SEC announcing it was raising over $1.3 billion in a single day.

That combination — engineering milestone plus massive capital raise — tells you almost everything you need to know about where AST SpaceMobile sits right now. The technology is beginning to prove itself. The bill to bring it to scale is enormous. And the market, at least for now, is willing to write the check.

What AST SpaceMobile Actually Does

Before diving into the financing mechanics, let's be precise about the business, because it's genuinely different from anything else in the satellite space.

AST SpaceMobile is building a network of large satellites in Low Earth Orbit (LEO) — the band of space between roughly 200 and 2,000 kilometers altitude — that can communicate directly with ordinary smartphones. Not modified phones, not special hardware dongles. Your existing iPhone or Android, using the same 4G LTE or 5G radio already inside it, would connect to an AST satellite overhead rather than a terrestrial cell tower.

This is the hard part that most satellite competitors haven't cracked. Starlink, for example, requires a pizza-box-sized receiver dish at your home. AST's approach — which relies on very large satellite antennas to compensate for the weak radio signal a standard phone emits — is protected by what the company describes as an extensive intellectual property and patent portfolio. As the 424B5 prospectus filed February 13, 2026 puts it: "We are building the first and only global Cellular Broadband network in space to be accessible directly by everyday smartphones (2G/4G-LTE/5G devices) for commercial use."

The commercial model relies on partnerships with MNOs (mobile network operators — the AT&Ts and Vodafones of the world). AST doesn't sell service directly to consumers. Instead, it enters revenue-sharing agreements with carriers, who offer AST-enabled connectivity as an add-on to their existing subscribers. The company currently has partnerships with 50-plus MNOs covering nearly 3 billion subscribers globally. That distribution reach, without owning a single retail store, is the sleeper asset most analysts underweight.

The $1.3 Billion Raise: Three Tranches, One Goal

The February 2026 capital raise was actually three simultaneous transactions structured to accomplish two things: fund satellite manufacturing and launch, while simultaneously cleaning up older, higher-cost debt. Understanding each tranche matters.

Tranche 1: The Registered Direct Offering

Registered direct offering of Class A shares — AST sold 1,862,741 shares at $96.92 per share, raising approximately $180.5 million in gross proceeds. A registered direct offering (or RDO) is a private placement sold directly to institutional investors but registered with the SEC, meaning the shares can be traded immediately without a lock-up period. The proceeds from this specific tranche were earmarked primarily to repurchase approximately $46.5 million of the company's existing 4.25% Convertible Notes.
Additional registered direct offering — Simultaneously, AST sold a further 4,475,223 Class A shares to fund the repurchase of $250 million in principal of its 2.375% Convertible Notes due 2032. The buyback cost approximately $433.7 million in cash — meaning the company paid a significant premium above face value to retire these notes early. Why? Because eliminating the ongoing interest obligations and the looming 2032 maturity wall gives the balance sheet more runway for the actual business of building satellites.

After these two placements, the total Class A shares outstanding stood at 273,844,635.

Tranche 2: The $1 Billion Convertible Note Offering

$1.0 billion in 2.25% convertible senior notes due 2036 — This is the centerpiece. A convertible senior note is a bond that pays interest and matures at a fixed date, but gives the holder the option to convert their bond into company stock at a preset price rather than receiving cash repayment. Investors accepted a 2.25% annual coupon (a very low interest rate for a pre-profit company) because the conversion option gives them exposure to ASTS equity upside. The overallotment option allows this tranche to expand to $1.15 billion.

The conversion price is approximately $116.30 per share — a 20% conversion premium above the stock price on the offering day. In plain terms: bondholders break even on the equity conversion only if ASTS stock rises more than 20% from the offering price. Below that threshold, they hold a bond. Above it, converting into shares becomes economically rational.

Proceeds are designated for general corporate purposes: accelerating global spectrum deployment, investing in government satellite applications, further debt reduction, and what the prospectus calls "opportunistic investments to accelerate our SpaceMobile Service and capabilities."

BlueBird 6: Why the Hardware Milestone Matters

The financing only makes sense if the technology can scale. BlueBird 6, which launched December 23, 2025 and successfully unfolded its massive antenna array on February 10, 2026, is the strongest hardware proof point the company has produced.

The prospectus describes it directly: "BlueBird 6 features the largest commercial communications array antenna ever deployed in Low Earth Orbit. Spanning approximately 2,400 square feet, the satellite is engineered to support peak data speeds of up to 120 Mbps with plans to deliver up to ten times the bandwidth capacity of the BlueBird 1-5 series."

Ten times the capacity of each predecessor satellite, at a per-unit capital cost of $21 million to $23 million, changes the unit economics of building the constellation. The first five BlueBird satellites were essentially proof-of-concept hardware. Block 2 satellites like BB6 are the production version. AST plans to launch approximately 45 to 60 Block 2 satellites by end of 2026.

The coverage math is straightforward:

25 total satellites (5 Block 1 + 20 Block 2) can provide non-continuous service to parts of the globe.
45–60 satellites enables continuous coverage of key markets.
~90 satellites achieves global continuous service.

At $21–23 million per satellite, building from 6 to 90 satellites costs roughly $1.7–$1.9 billion in capital expenditure alone, before launch costs, ground infrastructure, or operating expenses. This is why the constellation buildout requires capital raises of this magnitude.

The Ligado Spectrum Deal: Securing the Frequency Highway

Satellites are useless without access to radio spectrum — the licensed frequencies that let them communicate with ground-based devices. In October 2025, AST completed the first payment ($420 million) of a $550 million total deal — the Ligado Transaction — to acquire rights to up to 45 MHz of U.S. lower mid-band spectrum (the radio frequency range, roughly 1.4–1.5 GHz, that travels well through buildings and is well-suited for mobile broadband).

The remaining payments under this deal: $100 million due March 31, 2026, and $15 million upon regulatory close. The transaction still requires FCC (Federal Communications Commission) approval to fully close, which introduces meaningful regulatory risk — more on that shortly.

Mid-band spectrum is the sweet spot for delivering reliable broadband at meaningful speeds. Owning a dedicated 45 MHz block in the U.S. gives AST a frequency highway for direct-to-device service without depending entirely on carrier partners' existing licensed spectrum.

The Financial Reality: Where the Numbers Actually Stand

Honesty requires acknowledging the gap between the engineering story and the income statement. AST's 2025 preliminary revenue came in at approximately $63 million to $71 million. Against that, total operating expenses ran approximately $355 million to $363 million (or $257–$263 million on an adjusted basis, excluding non-cash items). The company is burning cash at a substantial rate.

As of December 31, 2025, AST held approximately $2,780 million in cash and equivalents against approximately $2,264 million in total consolidated indebtedness. The gross capital expenditure in property and equipment sits at roughly $1.6 billion. These are the numbers of a company still very much in the capital-intensive infrastructure phase — the equivalent of a utility building transmission lines before generating a single dollar of electricity revenue.

The ATM (at-the-market) program — where a company sells shares gradually into the open market at prevailing prices rather than in a single block — has also been active. Between the $800 million ATM program authorized in October 2025, ASTS sold approximately 10.1 million shares for net proceeds of roughly $706.3 million, with about $80 million of that program remaining.

One structural note worth flagging: CEO Abel Avellan controls 78,163,078 Class C shares with super-voting rights of up to 10 votes per share. That concentration of voting power means minority shareholders in Class A have very limited ability to influence corporate governance decisions — a feature common in founder-led tech companies, but worth understanding before buying.

What Could Break This Thesis

The bull case on ASTS depends on several things going right simultaneously, and the risk profile is genuinely multi-dimensional.

Capital dependency with no margin for error. The company needs to keep raising capital to fund satellite manufacturing and launch. At $21–23 million per satellite and roughly 84 more satellites needed after BB6, the capex runway is enormous. If credit markets tighten — a rate spike, a risk-off environment, a weak equity offering — canceling signed launch agreements would trigger financial penalties and set back the commercial timeline by years.
Ligado regulatory and litigation risk. The $550 million spectrum deal is not yet fully closed. The FCC must approve the transfer of Ligado's licenses to AST. More worryingly, Inmarsat (a satellite operator and competitor) has appealed a Delaware bankruptcy court order compelling Ligado to support regulatory approval. If Inmarsat succeeds, AST's access to 45 MHz of mid-band U.S. spectrum — central to its U.S. direct-to-device strategy — could be delayed or lost entirely.
Structural dilution overhang. The share count math is uncomfortable. Class A shares outstanding are 273 million post-placement, but the total potential share count from convertible note conversions, the existing ATM program, Ligado penny warrants covering 4.7 million shares, and equity compensation plans creates substantial overhang. Each capital raise adds to a denominator that dilutes existing holders — even when the capital raised is deployed productively.
Revenue-to-debt mismatch. With $63–71 million in 2025 revenues against $2.26 billion in debt and $355+ million in annual operating expenses, AST has no near-term path to operating cash flow self-sufficiency. The company is entirely dependent on capital markets. A prolonged period of inaccessible capital markets — not just for weeks but for quarters — would be existential.

Conclusion

AST SpaceMobile is, at its core, a bet on a specific engineering claim: that very large satellite antennas in low orbit can deliver broadband to unmodified smartphones at commercially viable speeds and costs. BlueBird 6's successful deployment and its 10x capacity advantage over earlier hardware is the most credible piece of evidence yet that this claim holds up in practice.

The $1.3 billion capital raise — structured carefully to retire expensive older debt while financing the 45–90 satellite constellation — shows a management team thinking about balance sheet architecture, not just fundraising for its own sake. The 2.25% coupon on the new 10-year convertible notes is remarkably cheap for a pre-profit company, suggesting institutional fixed-income investors genuinely believe in the underlying technology trajectory.

But the gap between the engineering achievement and the financial fundamentals remains vast. In 2026, the question shifts from "can the hardware work?" — which BB6 is helping answer affirmatively — to "can the company build and launch 45 to 60 more satellites before the capital runs out?" That's the metric I'm watching most closely in the months ahead.