Stock Analysis & Ideas

AST SpaceMobile Stock (NASDAQ:ASTS): A Different Kind of Space Race

Story Highlights

AST SpaceMobile is a company that will either disrupt cell phone technology as we know it or burn out in flames someday. Either way, it will be exciting to witness AST SpaceMobile’s quest to bring broadband connectivity to the world – and, just maybe, turn a huge profit with ASTS stock.

AST SpaceMobile (NASDAQ: ASTS) is one of those hero-or-zero companies that could change the world or eventually come crashing down to earth. With a recent test flight in the books, however, the company seems to have moonshot potential. Hence, I am bullish on AST SpaceMobile stock. Texas-headquartered AST SpaceMobile isn’t just another “space company.” Instead of sending rich people into space like some other companies do, AST SpaceMobile sends satellites into space in order to connect the digitally unconnected.

As the company put it, AST SpaceMobile is on a quest to “finally bring broadband to the billions who remain unconnected.” The company is probably referring to people living in developing nations and rural areas. This could actually be a vast, untapped market that the 5G-obsessed large-cap telecom corporations are largely ignoring. So, let’s learn more about the company and see if ASTS stock has rocket-launch potential.

ASTS Stock is Affordable but Highly Speculative

If “speculative” is a fancy way of saying that a financial asset is a gamble, then ASTS stock definitely fits that description. While dreams of flying into the skies are fine, be sure to stay grounded, as AST SpaceMobile shares are cheap but could always get cheaper (unless they reach zero, of course).

First of all, the company’s mission might fail. If successful, AST SpaceMobile would create the first space-based cellular broadband network that’s accessible by standard smartphones. That’s an all-or-nothing wager, and without a doubt, it’s costing AST SpaceMobile an awful lot of capital to deploy its satellites.

Frankly, some folks are skeptical about the build-out of satellite-based cellular connectivity networks. Walter Piecyk, an analyst at LightShed Partners, envisions a good-news, bad-news scenario, saying, “Technology development is going to start out slow … and it gets better and better.”

Piecyk added, “I’m a little skeptical about how far it can go, but there’s certainly plenty of incremental opportunities.” His quote comes from a Wall Street Journal article that seems to cast doubt on AST SpaceMobile’s starry-eyed connectivity dreams.

As for ASTS stock investors, they should be prepared for volatility. The share price recently zoomed from $7 to $14 but then came all the way back to $7. This sounds like a short-term trader’s playground, but it could cause heart palpitations for long-term investors.

AST SpaceMobile’s Test Satellite Launch Offers a Glimmer of Hope

Even as skepticism might cast doubt into prospective investors’ minds, AST SpaceMobile remains undeterred in its quest to send satellites into orbit. On that front, the company recently fulfilled a crucial promise with a successful test satellite launch.

This didn’t happen quickly or easily. AST SpaceMobile kept investors in the loop when the company announced on August 9 that its test satellite, BlueWalker 3, had arrived at Florida’s famous Cape Canaveral. The satellite had previously been stored in Texas, where AST SpaceMobile had conducted over 800 tests on the satellite.

With that, AST SpaceMobile teased the next steps for BlueWalker 3. “Once in low Earth orbit and following initial in-orbit testing and configuration, AST SpaceMobile plans to conduct [BlueWalker 3] direct-to-cell phone testing on every inhabited continent, in coordination with mobile network operators,” the company stated.

Finally, on September 13, AST SpaceMobile announced the successful launch of BlueWalker 3 into orbit. AST SpaceMobile Chief Strategy Officer Scott Wisniewski proudly announced, “BlueWalker 3 is on course and securely circling the earth,” and, “The satellite is thermally stable and communicating directly with ground stations.”

AST SpaceMobile Isn’t Profitable but is Improving Financially

Another risky aspect of AST SpaceMobile is that the company is what might be called “pre-profitable.” That’s a polite way of saying that AST SpaceMobile isn’t making more money than it’s spending. However, the company does seem to be improving in this regard.

The data indicates that AST SpaceMobile generated a lot more revenue in 2022’s second quarter than in the year-earlier quarter. It brought in $7.26 million in revenue versus $2.77 million, to be more precise.

Turning to its bottom line, AST SpaceMobile generated a net loss attributable to the common stockholders of $2.92 million. To put that figure in context, it’s a vast improvement over the $19.98 million loss reported in the year-earlier quarter. So, at least AST SpaceMobile appears to be in the process of closing its profitability gap.

Is ASTS Stock a Good Buy, According to Analysts?

Turning to Wall Street, ASTS stock comes in as a Moderate Buy, based on a single Buy rating. The price target for AST SpaceMobile is $30, implying 314.94% upside potential.

Conclusion: Should You Consider AST SpaceMobile Stock?

AST SpaceMobile’s successful test satellite launch was a milestone moment for the company. However, being a space pioneer is an expensive proposition, and the high costs are undoubtedly weighing on AST SpaceMobile’s bottom-line results. Plus, ASTS stock is likely to be volatile for a while and could just as easily go to zero as it could make a 10x move to the upside. That said, AST SpaceMobile is an intriguing company that’s unafraid to create a new business niche and dominate it. Therefore, risk-tolerant investors might want to consider a small, speculative stake in AST SpaceMobile shares.

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