What happened

There has been talk for a while that AST SpaceMobile (ASTS -2.31%) would eventually need to raise more capital. That day has come, and as a result, shares of the space-based telecom company were trading down by nearly 30% early in the session Wednesday.

So what

AST SpaceMobile is working to commercialize technology that it hopes will one day turn any cellphone into a satellite phone, which would, in theory, benefit those who travel frequently or who live in areas with poor terrestrial cell network coverage. It is a risky, but intriguing, space technology, and the company recently cleared some milestones toward commercializing the service.

But as we noted back in May, it ended the first quarter with just $185.7 million in cash and burned through $44.5 million during the period. Given that AST SpaceMobile does not expect to begin launching its satellite constellation until early 2024, it always seemed likely that it would need to raise additional funds.

Late on Tuesday, the company announced it would sell 12.5 million shares at $4.75 apiece, raising about $59 million. The secondary offering was priced at the low end of the proposed $4.75 to $5 range, implying that demand for the shares was not overwhelming.

Now what

AST SpaceMobile had about 75 million shares outstanding prior to the offering, and holders of those shares will shortly own smaller pieces of the company. If all goes to plan, that dilution will be a small price to pay. But this offering is also a reminder that there are a lot of twists and turns ahead for this company.

For one, it is not certain this will be its last secondary stock offering. Space is expensive, and risky, and big projects tend to take longer and cost more than corporate managers anticipate. And demand for AST SpaceMobile's service will likely be influenced by how much the company charges for it, which could limit its revenue even if all goes to plan and the satellites are launched on time.

AST SpaceMobile is a risky stock, and will remain one for the foreseeable future. For those who believe in the company's potential, it would be best to keep one's position in this stock as a very small part of a well-diversified portfolio.