AST SpaceMobile Soars Again, 50% Jump on Thursday, 1300% Gain in Three Months

Moomoo News Global wrote a column · Aug 16 19:12

Shares of $AST SpaceMobile (ASTS.US)$ skyrocketed by 50.7% and closed at $31.36 Thursday, buoyed by the company's Q2 earnings update. Despite posting a larger-than-anticipated loss, the company's plan to launch five satellites in early September has boosted market confidence.

AST SpaceMobile Soars Again, 50% Jump on Thursday, 1300% Gain in Three Months

According to Abel Avellan, Founder, Chairman, and CEO of AST SpaceMobile:

"We stand at a pivotal moment for AST SpaceMobile; The arrival of our first five commercial satellites at the launch site marks the culmination of years of relentless innovation and perseverance, in partnership with industry leaders like AT&T, Google, Verizon, Vodafone, and Rakuten, among others. The upcoming orbital launch is a significant step toward fulfilling our mission to eliminate dead zones and empower communities worldwide with space-based cellular broadband connectivity."

What Is Driving the Recent Rise in AST SpaceMobile's Stock?

AST SpaceMobile is a commercial aerospace company dedicated to building the world's first satellite cellular broadband network that directly communicates with standard smartphones. Its mission is to provide seamless broadband connectivity services to users worldwide, regardless of their location. AST SpaceMobile aims to fill the existing gap in the mobile communication market, particularly for remote areas and underserved populations.

$AST SpaceMobile (ASTS.US)$ has seen a sustained surge in this round of upswing for nearly three months, with a cumulative increase of up to 1300%. This can all be traced back to May 16, when the stock soared by nearly 70% due to the previous day's news of a partnership with the US telecom giant AT&T. Specifically, $AT&T (T.US)$and $AST SpaceMobile (ASTS.US)$ entered into a definitive commercial agreement to deliver a space-based broadband network directly to everyday cell phones that day. This agreement is in effect until 2030.

In addition, the recent upward momentum of the stock can also be attributed to:

● Regulatory Progress: On August 5th, AST SpaceMobile announced that the U.S. Federal Communications Commission (FCC) had granted an initial license for space-based operations in the United States. With this license, AST SpaceMobile is authorized to launch and operate V, S, and UHF frequencies to support gateway, feeder link, and telemetry, tracking, and control operations for the first five commercial BlueBird satellites.

"This regulatory milestone is a significant step towards achieving 100% nationwide coverage from space of the continental United States on premium cellular spectrum," said Scott Wisniewski, President & Chief Strategy Officer of AST SpaceMobile.

● Satellite Launch Plans: AST SpaceMobile's BlueWalker 3 test satellite successfully achieved the world's first cellular voice call via satellite, demonstrating the feasibility of its technology. Additionally, the company has completed the construction of the first batch of five commercial BlueBird satellites, and all eyes are now focused on the launch window starting on September 11th as they will become the largest commercial communication array in near-earth orbit history. This news significantly enhances investor confidence and is one of the reasons for the previous catalyzing of the stock price surge.

"This is a momentous occasion for AST SpaceMobile. These first five satellites are built on the success of our in-orbit BlueWalker 3 satellite and will provide U.S. nationwide non-continuous service with over 5,600 cells in premium low-band spectrum, with a planned 10-fold increase in processing bandwidth," said Abel Avellan, Chairman and CEO of AST SpaceMobile.

Analyzing AST SpaceMobile's Potential Advantages Relative to Competitors

AST SpaceMobile's main competitors include SpaceX and Lynk Global, but AST SpaceMobile focuses on providing direct-to-mobile services through its low Earth orbit satellites.

AST SpaceMobile's core business model is to provide satellite access services to mobile network operators, with spectrum and users provided by the mobile network operators. The newly generated revenue is shared on a 1:1 ratio. Compared to SpaceX, AST SpaceMobile has an advantage in its partnerships with numerous large telecom companies such as AT&T, Verizon, and Vodafone, providing a huge potential user base for its services. Data shows that AST SpaceMobile has signed cooperation memorandums with over 30 mobile network operators globally, a number that is significantly higher than SpaceX and Lynk Global. Just looking at AT&T, one of the largest mobile and internet service providers in the United States, its wireless 5G network covers approximately 290 million Americans.

Source: @NomadBets

In terms of technology, AST SpaceMobile has over 3,100 patents and pending patents. The company's technological advantages mainly lie in direct communication with smartphones, low-latency broadband architecture, global coverage, cooperation with mobile network operators, and 3GPP standard compatibility.

Moreover, as of June 30, new investments have brought nearly $290 million in cash and equivalents to AST SpaceMobile, an increase from $212 million in the previous quarter. The company also has an additional $51.5 million of available liquidity that can be drawn under its senior secured credit facility. As developing and deploying a global satellite network requires enormous funding, this means that the steadily growing financial strength may further support future R&D and solidify its market position.

ASTS's direct competitor, SpaceX, has an advantage in the number of satellites and will use the "Starlink" constellation as a baseline, with an enhanced version of the "Starlink" satellite serving as a "space station." Considering that SpaceX announced a partnership with T-Mobile (a multinational mobile phone operator and subsidiary of Deutsche Telekom) in August 2022, the global market for direct satellite communication with smartphones may become a battle between two giants or a three-way competition.

Opinions From Wall Street Analysts

After the release of this week's financial report, two research institutions significantly raised their price targets for AST SpaceMobile. However, the speed of this positive change could not keep up with the pace of the stock price increase.

Specifically, UBS analyst Christopher Schoell raised the firm's price target on AST SpaceMobile to $30 from $13 and maintains a Buy rating on the shares. While UBS still considers AST SpaceMobile as a high-risk, high-reward investment, the initial U.S. regulatory approval, upcoming launch of its first commercial satellites, and progress in partnerships and funding further strengthen the firm's confidence in AST's plans for commercialization and scalability.

In addition, B. Riley raised the firm's price target on AST SpaceMobile to $26 from $15 and maintains a Buy rating on the shares based on the Q2 report. As the company capitalized on its strong stock performance to raise $80M, B. Riley states that AST is well-funded, with "ample cash" and an additional $51.5M of liquidity available from its senior secured facility as it prepares for the launch of its first five Block 1 BlueBird satellites. Riley believes that AST continues to be the frontrunner in the race to enable true direct-to-device broadband connectivity.

It is worth noting that despite the significant increase in price targets, the latest closing price of $31.36 still exceeds the highest target price of $30. This reflects investors' confidence and enthusiasm in the stock, but it may also indicate that short-term sentiment is overheated. According to moomoo's technical indicators, 12 out of 15 indicators, including RSI (6) and CCI, show overbought or severely overbought conditions. Furthermore, the company's latest financial report reveals that Q2 revenue stood at a meager $900,000, while its loss of $131 million exceeded analysts' expectations and expanded compared to the previous quarter. The time frame for achieving profitability and the scale of profits both remain uncertain. Currently, the company's significant cash flow mainly comes from financing, and its self-sustaining ability remains to be observed.