The stock market has treated investors well so far in 2023, and although the past couple of weeks have been a bit more turbulent, the Nasdaq Composite (^IXIC +2.02%) gave Wall Street a gain of more than 1.5% on Tuesday. Wednesday morning looks a bit less confident, though, with futures on the Nasdaq index falling about a third of a percent in premarket trading.
One problem with big gains in share prices is that companies often use them as an opportunity to sell stock to raise capital. Axsome Therapeutics (AXSM 0.19%) shares recently returned to levels last seen in 2020, so it's somewhat understandable for the biotech company to pick this occasion to do a public offering. However, for AST SpaceMobile (ASTS +10.66%), the overall price history for the stock hasn't been nearly as favorable. Below, you'll learn more about the offerings both companies just made and why investors aren't entirely pleased.
Axsome aims to give its balance sheet a boost
Shares of Axsome Therapeutics were down 9% early Wednesday morning. The biopharmaceutical company specializing in treatments for central nervous system disorders announced that it would sell shares of common stock.
Axsome's motivation is clear. As a biotech with a pipeline of candidate drugs, Axsome needs cash in order to run late-stage clinical trials on its most promising treatments, and the proceeds from the offering will go toward both existing and potential new clinical programs in the future. In addition, Axsome will need capital to expand its commercialization efforts for its already-approved Sunosi drug for sleep disorders and its antidepressant drug Auvelity.
NASDAQ: AXSM
Key Data Points
The filed prospectus did not indicate a specific number of shares that Axsome intends to sell. However, the offering will fall under an existing shelf registration statement.
In the past couple of weeks, Axsome has told investors that it expects its top treatments to generate as much as $11.5 billion in revenue in the U.S. market at peak sales, which dramatically exceeds what most analysts following the stock had projected. Moreover, if Auvelity pans out as a possible treatment that could help Alzheimer's disease as well as those looking to quit smoking, then it could dramatically expand its addressable market and add to Axsome's overall success.
AST gets hungry for cash
Losses for AST SpaceMobile shares were more significant, as the stock price plunged 28% early Wednesday morning. The space services stock gave more details on a previously announced stock offering, and investors were disappointed with the results of AST's efforts to raise cash.
AST said that it had increased the size of its offering of stock to 12.5 million shares. It raised gross proceeds of $59.4 million from the shares it sold, which implied a stock price of roughly $4.75 per share for those investors participating in the offering. The previous announcement had suggested a 12 million share offering.
NASDAQ: ASTS
Key Data Points
That offering price came as a big shock to investors, given that AST shares closed at $6.37 per share on Tuesday afternoon and had traded above $7 per share briefly within the past week. The company had come into the spotlight in part because of AST's addition to the small-cap Russell 2000 index as part of its annual rebalancing.
Space stocks have drawn some attention recently, but the business is highly capital-intensive. AST will need the cash, but it nevertheless dilutes current investors, and it's unfortunate that the offering couldn't come at a better price.
