Tumbling to a price of $45.64 during today's afternoon trading session, shares of AST SpaceMobile are now -9.15% below their average target price of $50.24. Does this mean the stock will reverse course? Analysts are giving ASTS an average rating of buy and target prices ranging from 30.0 to 62.0 dollars per share.
The market, on the other hand, is a bit more pessimistic. AST SpaceMobile's short interest -- meaning the percentage of its share float that is being shorted on an expectation of a price decline -- is quite high at 17.7%. The float includes only shares that are available for public trading, and excludes preferred shares.
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.
A possible indicator of market sentiment on a stock (besides its share price, of course) is the portion of institutional investors that make up its shareholders. Institutions such as banks, hedge funds, and wealth managers deploy significant resources towards identifying good investments. If they are invested heavily in a given company's stock, it could mean it's a good investment. Or it could mean the company is being targeted by a takeover attempt.
For what it's worth, institutions own 36.0% of AST SpaceMobile's shares, which is an average amount. It means that many institutions are invested, but not to the extent that they would be in a stock such as Apple or Amazon, whose institutional ownership rates hover around 60%. Bear in mind that institutional ownership is just one piece of the puzzle in determining market sentiment, and you should not consider this factor alone in making an investment decision.
To sum up, AST SpaceMobile is probably the subject of mixed market sentiment because of an analyst consensus of some upside potential, 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 $-1.86
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AST SpaceMobile has a trailing 12 month Price to Earnings (P/E) ratio of -24.5 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 13.18 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
