AST SpaceMobile has spent much of 2024 showcasing the rate of growth that wouldn’t seem out of place next to an Nvidia ticker last year, but is the innovative stock destined for further greatness?
Much like Nvidia, AST SpaceMobile (NASDAQ: ASTS) is a market leader in an emerging market that has the potential to transform our relationship with technology.
The company is pioneering satellite smartphone coverage, which would pave the way for users to continually access a strong signal no matter where they are.
Founded in Texas in 2017, the company finally launched its Block 1 first five Bluebird satellites on September 12, 2024. The launch has represented the first step towards AST SpaceMobile becoming the world’s first satellite-based cellular broadband network.
As a result, ASTS rallied 489% between January and September 2024. Although achieving global network coverage through satellite will take a $5 billion investment and 168 satellites to achieve, investors appear confident that they’re buying into a stock with significant potential.
Crucially, AST SpaceMobile has already entered a series of partnerships with globally renowned network operators like Vodafone, Telefonica, Orange, AT&T, and Verizon in a move that could see its technology reach around 3 billion users.
Despite this, ASTS remains a highly speculative stock, and such significant price rallies already this year are rightly cause for concern among investors who may be mulling its addition to their portfolios. So, what’s to come from AST SpaceMobile in the future?
Buying Into Ambition
Delving into AST SpaceMobile’s fundamentals, the company’s Q2 2024 earnings with a loss of $0.51 cents per share, falling well short of analyst estimates of $0.22 losses.
With the help of a strategic $100 million investment from Verizon during the quarter, AST ended the quarter with $287.6 million in cash, cash equivalents, and restricted cash in addition to $51.5 million of additional liquidity available through a secured credit facility.
This serves as a timely reminder that we’re looking at an extremely speculative stock, and its exponential growth in 2024 represents investors buying into the company’s industry ambitions at scale.
Until the launch of its satellites on September 12, 2024, AST SpaceMobile didn’t even have a functional service.
With at least 95 satellites needed to provide the level of service the company hopes to offer and a to build and launch its next 20 satellites alone, ASTS is a stock that still has many question markets hanging over it.
Although the company experienced losses per share in its Q2 2024 results, B. Riley Securities analyst Mike Crawford increased his ASTS price target . Now, with the stock briefly peaking at $38.60, what’s next for AST SpaceMobile?
Cautious Optimism Ahead
With AST SpaceMobile already working on building its next 17 satellites with a view to delivering full-scale text, voice, and data services throughout the United States in the coming years, analyst estimates suggest that the company will generate $6 million in 2024 before jumping to $74 million in 2025.
This suggests that ASTS has a strong platform for future growth, but there’s a concern that the stock is already growing to represent a value that’s for many more years.
With an enterprise value of around $4 billion today, purchasing the stock at its current level suggests that investors will be paying for revenue that’s unlikely to be realized until at least 2027.
Considering that SpaceX’s Starlink service could, in the future, shift to cellular services, there may not be much of a margin for competition within AST SpaceMobile’s current Wall Street value.
However, the successful launch of its first five satellites means that ASTS is finally in a position to begin delivering on its promise. With the connectivity implications of satellite cellular networks, it seems inevitable that this will be the next major frontier for smartphones, and AST’s current position as an innovator and market leader makes its current value seem like a bargain, considering its addressable network of 3 billion users.
“The company is on track to reach profitability by 2027, with annual revenue projected to grow to $35 billion by 2032,” explained Maxim Manturov, head of investment research at Freedom24. “If AST SpaceMobile can leverage its first mover advantage, it has the potential to become the next Starlink, transforming the landscape of global Internet connectivity and telecommunications.”
“The company's ability to provide ubiquitous mobile broadband services via satellite without the need for specialized equipment makes it a potential leader in the emerging telecommunications industry.”
Is ASTS a Buy for Investors?
AST SpaceMobile is a high-risk opportunity that investors have been quick to embrace, making its price a little less attractive for its potential upside in years to come.
However, the stock remains one of the biggest innovators in an industry that’s heavily utilized worldwide. The prospective use cases could mean that AST products become part of daily life for smartphone users globally, making its current price seem like a bargain opportunity.
The challenge of becoming profitable and the threat of competition from Starlink could dampen its prospects, but AST SpaceMobile has plenty of potential to transform the communication landscape at scale. For investors with a risk appetite, this could make one of 2024’s biggest Wall Street stars a great prospect for years to come.
