Timing, they say, is everything.
Approximately ten days ago, the stock price of satellite surveillance company BlackSky Technology (BKSY) significantly increased following positive remarks from analyst Scott Buck at H.C. Wainwright. Buck predicted that the stock, valued under $22 at the time, would reach $28 within a year. Investors seized this opportunity and drove up BlackSky’s share price to (and beyond, as of yesterday) $28. This prediction essentially came true due to investor interest in the company.
Then today happened.
What happened to BlackSky today?
Currently, shares of BlackSky are plummeting by around 20%, having dropped significantly since earlier today. This steep decline is primarily due to BlackSky’s announcement yesterday about issuing $125 million in convertible debt. If there was sufficient demand, the company could potentially raise an additional $143.8 million. Out of this newly raised capital, approximately $113.3 million will be used to pay off existing debts and the remaining amount will be allocated for various corporate expenses.
The interest in the debt sale was high, and today, BlackSky increased the proposed amount to a possible $160 million, with an additional potential of $185 million.
Is BlackSky a sell?
Investors seem displeased with the recent announcement, possibly due to BlackSky’s decision to pay a high interest rate of 8.25% on their new debt or concerns about potential share dilution if the debt is converted into stocks. However, it appears they might be overlooking some key points in their analysis.
Initially, it appears that BlackSky was incurring approximately 11.5% interest on its previous debt. Fortunately, the new interest rate is more favorable compared to the old one.
Additionally, BlackSky’s new debt won’t transform into equity until the share price reaches close to $37 per share. This means the stock would need to increase by roughly 60% for this conversion to occur, which I believe most investors would find exciting if it did happen.
After taking everything into account, it seems that today’s market drop could be an exaggerated response. On the other hand, BlackSky’s latest update appears quite promising to me.
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2025-07-18 21:41