Will ASTS' Ploy to Connect Directly to User Mobiles Aid the Stock?
AST SpaceMobile, Inc. ASTS recently disclosed some fine print on how it plans to bill customers for availing its cellular satellite service. This Midland, TX-based broadband service provider, which is transforming connectivity with direct-to-cell technology leveraging the first & only space-based cellular broadband network, intends to charge users as a monthly add-on and through a "day pass" system that consumers can opt for whenever needed.
The monthly add-on feature will charge a fixed monthly rate to add AST SpaceMobile as a supplemental service to an existing cellular plan and will automatically connect with its network upon entering an area without cell tower coverage. The day-pass option will trigger a notification message to customers the moment their phone travels outside a carrier’s ground-based network and will ask subscribers if they wish to turn on the SpaceMobile service. On approval, users will get connected to AST SpaceMobile’s orbiting satellites that offer low latency and high connectivity to closely mirror terrestrial cellular architecture.
Although the exact chargeable amount is yet to be divulged, AST SpaceMobile has taken the market by storm. With a diverse portfolio of more than 3,450 patent and patent-pending claims worldwide for the direct-to-cell satellite ecosystem from space to Earth, AST SpaceMobile’s remarkable transformation in recent months offers a competitive edge across the broader technology market.
How ASTS Hogged the Limelight
The SpaceMobile service is compatible with all major brands available in the market and connects directly to everyday mobile phones. It is based on a novel technology that delivers broadband connectivity from space to unmodified mobile devices, providing a service to fill cellular coverage gaps in a differentiated approach compared to other existing space-based communication services.
AST SpaceMobile has partnered with leading carriers such as AT&T Inc. T and Verizon Communications Inc. VZ to tap into a pre-existing pool of cell customers as well as avail funds to help build a worldwide satellite network. With AT&T, ASTS has entered into a definitive commercial agreement, extending until 2030, to provide a space-based direct-to-mobile technology to complement and integrate with the former’s mobile network. This approach aims to provide customers with connectivity in locations previously deemed unreachable, enhancing AT&T’s industry leadership in utilizing emerging satellite technologies.
ASTS also collaborated with Verizon, wherein the latter made a $100 million commitment for satellite direct-to-cellular service for its customers. The two back-to-back deals sent the ASTS stock price soaring. It further enhanced cellular coverage in the United States, essentially eliminating dead zones and empowering remote areas of the country with space-based connectivity.
ASTS Riding on Bluebird Satellites
AST SpaceMobile has successfully sent its first five commercial satellites in low Earth orbits, marking a key advancement in developing a space-based mobile network infrastructure. Dubbed Bluebird, these satellites have the largest-ever commercial communications arrays spanning 693 square feet. They offer non-continuous service across the United States using more than 5,600 cells within the premium low-band spectrum.
This achievement follows the success of AST SpaceMobile's in-orbit BlueWalker 3 satellite. It marks significant progress in the company's mission to create a space-based cellular broadband network that directly links with mobile devices, eliminating the need for ground-based infrastructure. By expanding its connectivity to remote areas, the company aims to ensure that more people have access to vital communication services.
Price Performance of ASTS
ASTS has gained a stellar 1107.7% over the past six months compared with the industry’s growth of 16.9%. It has also outperformed its peers like Aviat Networks, Inc. AVNW and Comtech Telecommunications Corp. CMTL over this period.
Six-Month Price Performance
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ASTS Income Statement Bleeds Red
Owing to high infrastructure set-up costs and research and development expenses for a highly sophisticated technology for developing satellites, AST SpaceMobile has reported losses for the past few years. Management also envisions significant expenditures in the upcoming months for building and launching the next crop of satellites in tune with its expansion plans to serve the full spectrum of U.S. subscribers. This has made ASTS a high-risk investment option.
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Estimate Revision Trend of ASTS
The Zacks Consensus Estimate for AST SpaceMobile for 2024 and 2025 has widened 164.1% and 165.4%, respectively, to a loss of $1.03 and a loss of 51 cents per share over the past year. The negative estimate revision depicts pessimism about the stock’s growth potential as investors remain skeptical about the success of its business model.
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End Note
The collaboration with leading carriers is seen as a pathway to unlocking the potential of space-based cellular broadband, promising seamless, reliable service across the continental United States. The successful launch of the Bluebird satellites is expected to transform network connectivity and help bridge the digital divide, expanding its global presence and enhancing AST SpaceMobile’s capabilities in providing ubiquitous connectivity.
However, with a Zacks Rank #3 (Hold), AST SpaceMobile appears to be treading in the middle of the road, and new investors could be better off if they trade with caution. The downtrend in estimate revisions further portrays skepticism about the company’s business model. It has also incurred losses over the past couple of years and is not likely to overcome this trend in the near future with high infrastructure investments being lined up. Consequently, it might not be a prudent investment decision to bet on the stock at the moment. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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