AST SpaceMobile, Inc. (ASTS) experienced a significant after-hours plunge of 12.36% on Wednesday following the company's announcement regarding its intent to offer $400 million in convertible senior notes due in 2032.

The proposed private offering, subject to market conditions, aims to raise capital from qualified institutional buyers. The convertible notes will be senior, unsecured obligations of AST SpaceMobile, accruing interest payable semi-annually and maturing on March 1, 2032, unless earlier converted, redeemed, or repurchased.

The market reaction suggests investors are cautious about the potential dilution and impact on the company's financials. Convertible debt instruments allow holders to convert their notes into shares of the issuer's common stock, potentially diluting existing shareholders' ownership if conversions occur. Additionally, the interest payments on the debt could strain the company's cash flows, especially considering AST SpaceMobile's current pre-revenue stage.