AST SpaceMobile (ASTS) is having a rough Wednesday evening. The satellite-to-cellphone company announced it plans to raise $1 billion through a private offering of convertible senior notes due 2034, and investors are not thrilled. Shares dropped 12.55% in after-hours trading to $57.99.

The offering is aimed at qualified institutional buyers, and the company is giving initial purchasers a 13-day window to buy up to an additional $150 million of the notes. That's a lot of paper to absorb.

So what's AST SpaceMobile going to do with all that cash? Part of the proceeds will cover the cost of capped call transactions—a common hedge to reduce potential dilution from the notes. The rest will fund growth initiatives and, more interestingly, secure additional launch capacity for its space-based cellular broadband network. The company says it may use the money for partnerships or acquisitions that would vertically integrate the business and reduce its reliance on third-party launch providers. In other words, AST SpaceMobile wants to bring more of its rocket-launching in-house.

As of March 31, the company had about $3.5 billion in total cash, cash equivalents, and restricted cash. So this offering isn't about survival—it's about scaling up aggressively. But convertible notes always come with a trade-off: potential dilution for existing shareholders, which explains the sell-off.

For now, the market is voting with its sell button. Whether this capital raise pays off depends on how quickly AST SpaceMobile can turn that $1 billion into a working space network.