During today's afternoon trading session, AST SpaceMobile took the market by storm, rocketing to $53.72 per share despite it now being above its mean target price of $46.63. This 1.2% movement implies there may not be much more room for upwards movement for the stock -- if its analysts are to be believed. They are giving the Communication Equipment stock on average rating of buy, with target prices ranging from 30.0 to 64.0 dollars per share.
The market is more pessimistic on AST SpaceMobile, because its short interest -- meaning the percentage of its shares that are being shorted on an expectation of a price decline -- is quite high at 19.1%. The float includes only shares that are available for public trading, and excludes preferred shares held by insiders.
Short selling involves borrowing shares and then selling them at current market prices. In the successful version of the strategy, the shares are purchased at a lower price at some time in the future. The investor then returns the shares to the lender, and keeps the profit made on the sell/buy transaction.
We can make inferences about the market sentiment surrounding AST SpaceMobile by analyzing its rate of institutional ownership. If institutions such as hedge funds and pension funds are the primary shareholders of a corporation, it most likely means that its shares are a good investment according to those institutions' analysts.
At 37.9%, the rate of institutional ownership is average, indicating that a sufficient number of institutions have concluded that it is a stable investment. Beware, however, that the rate of institutional ownership could also indicate an ongoing proxy battle or takeover attempt -- so you should also periodically check the news about a stock whose institutional ownership you are tracking.
In conclusion, we see mixed market sentiment regarding AST SpaceMobile because of an analyst belief that shares are overpriced, a buy rating, an unusually large proportion of its shares sold short, and only a small number of institutional investors. At Market Inference, we believe that any investment decision should be preceded by an in-depth analysis of the company's fundamental values and a comparison with similar stocks.
Here's a snapshot of some important facts to keep in mind about ASTS:
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The stock has trailing 12 month earnings per share (EPS) of $-1.98
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AST SpaceMobile has a trailing 12 month Price to Earnings (P/E) ratio of -27.1 compared to the S&P 500 average of 29.3
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The company has a Price to Book (P/B) ratio of 22.38 in contrast to the S&P 500's average ratio of 4.74
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AST SpaceMobile is a Consumer Discretionary company, and the sector average P/E and P/B ratios are 20.93 and 2.93 respectively
