AST SpaceMobile (ASTS -10.48%), a developer of low Earth orbit (LEO) satellites, has successfully launched 13 of its BlueBird satellites to date. These satellites, which are much bigger than SpaceX‘s (SPCX +1.25%) Starlink satellites, help telecom giants like AT&T (T -9.81%) and Verizon (VZ -8.75%) expand their cellular networks to remote areas that their terrestrial towers can’t reach. AST is already working with over 60 carriers to reach more than 3 billion wireless subscribers worldwide, so it clearly has plenty of room to grow.
However, AST doesn’t generate any recurring commercial revenue yet. Instead, it generates all of its revenue from government contracts and prepayments from its telecom partners.
Image source: AST SpaceMobile.
For AST SpaceMobile to deliver stable cellular connections and generate recurring commercial revenue, it must expand its constellation to at least 45 satellites. It had planned to reach that milestone by late 2026. But in mid-July, it pushed back that target to early 2027.
AST just delivered its next three BlueBird satellites (14, 15, and 16) to Cape Canaveral, but it’s unclear when it will launch them. It’s also continuing the production of its future satellites through BlueBird 50. Should you invest in AST before its commercial business finally blasts off?
What could happen to AST SpaceMobile over the next few years?
From 2025 to 2028, analysts expect AST SpaceMobile’s revenue to surge from $71 million to $1.73 billion as it begins providing direct-to-cell services to AT&T and Verizon. They also expect its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to turn positive in 2027 and soar nearly 17 times to $1.25 billion in 2028. That growth should be driven by the gradual expansion of its constellation toward its long-term goal of 248 satellites.
With an enterprise value of $17.2 billion, AST’s stock trades at 15 times its projected 2028 adjusted EBITDA. That valuation looks reasonable relative to its growth potential, but three unpredictable headwinds are driving away the bulls and compressing its valuations.
Today’s Change
(-10.48%) $-5.97
Current Price
$50.97
Key Data Points
Market Cap
Day’s Range
$47.57 – $55.85
52wk Range
$47.57 – $133.86
Volume
54.3M
Avg Vol
12.9M
Gross Margin
-24279.14%
First, Starlink’s recent acquisition of T-Mobile‘s (TMUS -13.27%) 800 MHz spectrum will position it as a major competitor for AT&T and Verizon in the wireless market. To keep up, AT&T and Verizon will likely need to ramp up their spending on AST’s satellite services. However, AST could struggle to expand its constellation fast enough to meet that demand.
Second, AST is completely dependent on third-party launch partners — including SpaceX and Blue Origin — to carry its satellites into orbit. Therefore, AST has much less control over its own launch schedule than SpaceX, which launches its Starlink satellites with its own rockets.
Lastly, AST will continue to issue more debt and shares to support its capital-intensive expansion. It ended its latest quarter with $2.96 billion in long-term debt, and its share count has increased by 479% since it closed its SPAC merger on April 6, 2021. If the Fed continues to raise its benchmark rates, its borrowing costs and interest payments could skyrocket.
Is it the right time to buy AST SpaceMobile’s stock?
AST SpaceMobile has plenty of growth potential, but it will struggle to attract new investors as long as interest rates are rising. SpaceX also stands out as a more diverse and vertically integrated player in the space logistics, satellite internet services, and AI markets.
That’s why AST’s stock has declined more than 40% over the past 12 months, and why it could sink even lower before it’s considered a bargain. AST might deserve a closer look if it successfully expands its constellation to 45 satellites next year. Still, investors should assess how much that expansion increases its debt and dilutes existing shares before pulling the trigger.