AST SpaceMobile (ASTS -0.61%) wants to connect the world. The company plans to be the leader in using satellite technology to bring broadband directly to cellphone users across the globe. It’s been making steady progress on that goal with the launch of its first satellites last year.
But AST shares have been plummeting this week. As of Friday morning, the stock has tumbled by 22%, according to data provided by S&P Global Market Intelligence. Before digging into why that happened, investors should take a step back and note that shares are still 25% higher for the year.
Insider selling can spook investors
AST stock rose earlier this year after it secured new funding, announced a new government contract supporting the U.S. Space Force, received Federal Communications Commission (FCC) authorization to test its service in the U.S., and signed a new agreement with Vodafone to serve European markets.
That all helps explain why AST stock soared more than 50% in the first six weeks of the year. And that surge may be why two AST directors, Julio A. Torres and Ronald Rubin, unloaded shares this week.
What do these sales mean?
Torres sold 20,000 shares of AST stock, and Rubin sold 7,000 shares — both when the stock was north of $30 per share. However, investors shouldn’t read anything into those transactions. Company insiders sell shares for various reasons. Although they both may have been trying to take advantage of the rising stock price, the sales consisted of vested restricted stock that had been issued for compensation.
It doesn’t mean either director thinks less about the potential of AST’s business or the future stock price. Other shareholders may also have been trying to lock in some profits on this volatile name this week. Therefore, long-term investors who see a future with a space-based cellular broadband network shouldn’t read anything into this week’s stock movement.
Howard Smith has positions in AST SpaceMobile and has the following options: short May 2025 $40 calls on AST SpaceMobile. The Motley Fool recommends Vodafone Group Public. The Motley Fool has a disclosure policy.
