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Claire Yubin Oh & Luke Kawa4h

AST SpaceMobile drops after announcing new share issuance and plans to raise more debt

AST SpaceMobile is down in premarket trading on Wednesday after the space-based cellular broadband network company announced that it’s refinancing by issuing more shares and raising more debt.

Most notably for shareholders is that these plans include dilution to the tune of about 2 million shares at $78.61 per share, with the proceeds being used to buy out $50 million out of $100 million in senior convertible notes due in 2032, which have a coupon of 4.25%, from their holders.

Separately, the company also announced an offering of convertible senior notes that was quickly upsized to $1 billion, which will have a coupon of 2% and are due in 2036. These notes have an initial conversion price of about $96.30 per share, more than 20% above where shares closed on Tuesday. There’s the potential for an additional $150 million of these notes to be issued.

If the full initial $1 billion of notes were converted to shares, this would notionally add around 10.4 million shares to the company’s shares outstanding (274.6 million as of the latest count, per Bloomberg).

AST SpaceMobile said it would be able to settle conversions of the notes through cash or stock, or a combination thereof, and plans to use the proceeds for general corporate purposes and “funding the deployment of AST SpaceMobile’s worldwide constellation of satellites.”

So, in sum: more shares, more overall debt, the potential for additional shareholder dilution going forward in light of this addition of convertible notes, but less debt in 2032 that had a higher coupon than these new notes.

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Beyond Meat halted for downside volatility after daily gain of more than 100% disappears

When the broad market turned shortly after 10 a.m. ET, the meme stocks were not immune from the carnage for long.

Beyond Meat, which was up 112% at its peak during regular trading hours on Wednesday amid another day of insanely high volumes and call activity, was halted for downside volatility after briefly erasing all of those gains.

As of 11:49 a.m. ET, the retail trader who posted their “YOLO” buy of 10,000 shares at a price of $7.50 on r/WallStreetBets is now down more than 40% (or $30,000) on the day.

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The momentum unwind accelerates in megacaps, with MTUM on its longest streak of underperformance since 2023

First, high-flying speculative stocks took a nosedive. Then gold lost some of its shine. Now, the megacap components of the momentum trade are also looking wobbly.

The iShares MSCI USA Momentum Factor ETF, which holds stocks with the best risk-adjusted price performance over the past six months and one year, is trailing the SPDR S&P 500 ETF by more than 1 percentage point today through 11:27 a.m. ET.

As of 11:23 a.m. ET, more than one-fifth of its 125 members are down more than 2%, headlined by big tumbles in Netflix, Carvana, GE Vernova, Rocket Lab, Quanta Services, and Robinhood Markets.

(Robinhood Markets Inc. is the parent company of Sherwood Media, an independently operated media company subject to certain legal and regulatory restrictions.)

The momentum ETF is in the midst of its seventh straight session of lagging the SPDR S&P 500 ETF, its longest such streak of underperformance since Q4 2023.

The negative reactions to GE Vernova and Netflix’s earnings reports — both MTUM constituents — may be the catalyst for the big retrenchment in the space, the same way Walmart’s disappointing outlook sank the group (and the overall market) in the first quarter.

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Matt Phillips46m

Oklo, nuke stocks battered amid speculative stock and momentum unwind

Amid a broader unwind of momentum trades, stocks tied to the nuclear-powered AI trade — Oklo, Nano Nuclear, and Centrus Energy among them — are taking a particularly hard beating.

JPMorgan strategist Arun Jain estimates that retail traders have dumped $24 million in Oklo shares through 11 a.m. ET.

This tumble comes alongside a tough-minded story from the Financial Times examining the prospects of this zero-revenue company, which as of yesterday had a market value of $20.6 billion. (It’s below $18 billion after today’s drop.)

Of Oklo’s plans to build smaller nuclear reactors using liquid sodium as a coolant rather than water, the salmon-toned periodical wrote:

“Some experts point to the failure of sodium-cooled reactors built in the US between 1950 and 1976.

Critics also note proliferation risks because Oklo’s plans would see plutonium move into private industry hands, where it could be at risk of diversion or theft by those who seek to build an atomic bomb. A decision by the US Nuclear Regulatory Commission to reject a previous Oklo application to build a sodium-cooled reactor in 2022 has also raised questions.

‘That NRC deemed Oklo beyond help should be a red flag,’ said Allison Macfarlane, a geologist and former chair at the regulator now at the University of British Columbia.

‘Liquid sodium is highly corrosive, flammable and explosive on contact with air and water,’ she said. ‘Many countries have tried to build these reactors before but they haven’t managed to prove they are commercially viable at scale.’”

“Some experts point to the failure of sodium-cooled reactors built in the US between 1950 and 1976.

Critics also note proliferation risks because Oklo’s plans would see plutonium move into private industry hands, where it could be at risk of diversion or theft by those who seek to build an atomic bomb. A decision by the US Nuclear Regulatory Commission to reject a previous Oklo application to build a sodium-cooled reactor in 2022 has also raised questions.

‘That NRC deemed Oklo beyond help should be a red flag,’ said Allison Macfarlane, a geologist and former chair at the regulator now at the University of British Columbia.

‘Liquid sodium is highly corrosive, flammable and explosive on contact with air and water,’ she said. ‘Many countries have tried to build these reactors before but they haven’t managed to prove they are commercially viable at scale.’”

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Retail traders hit the sell button on quantum computing stocks

In a parallel universe, retail traders are doubling down on the long-term potential of quantum computing companies. But in this one, they’re very much heading for the exits after these companies, which are in the early stages of commercialization, have enjoyed a monster run that’s beginning to sour.

JPMorgan strategist Arun Jain estimates that retail traders are net sellers of single stocks today to the tune of $336 million, as of 11 a.m. ET. And quantum stocks Rigetti Computing and D-Wave Quantum are among the names seeing the biggest outflows, with $26 million and $20 million in net sales, respectively.

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Intuitive Surgical soars as Q3 earnings beat sparks a wave of analyst upgrades

Intuitive Surgical shares leapt nearly 17% Wednesday morning after the company topped Q3 estimates after the bell on Tuesday.

Adjusted earnings per share came in at $2.40, beating the Street’s estimate of $1.99. Revenue reached $2.51 billion, easily above the forecast of $2.41 billion.

The results were largely powered by strong demand for its da Vinci and Ion robotic surgical systems. Worldwide procedures for both da Vinci and Ion systems grew approximately 20% compared with the same quarter a year ago. Analysts were quick to take action on the strong results:

Piper Sandler maintained its “buy” rating on the stock and raised its price target to $610 from $595.
Wells Fargo reiterated a “buy” rating and lifted its target to $600 from $599.
BTIG kept a “buy” rating and increased its target to $589 from $529.
Evercore ISI maintained an “in-line” rating but raised its target to $540 from $450.
Baird reiterated a “buy” rating and hiked its price target to $655 from $536.

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