ASTS Stock Sinks 9%, but CEO Abel Avellan Points to ‘Real Progress on Every Front’
AST SpaceMobile's (ASTS) stock jumped 14% on Nov. 9 after it announced a joint venture with Japanese conglomerate Rakuten (RKUNY) to bring satellite cell service to Japan. But that rally failed to survive the earnings report released after the close. The company missed expectations on both revenue and earnings, and ASTS stock fell about 9% the next day. This morning's trading, however, is seeing the stock bounce back around 8% again, but it is to be seen if it'll persist. In the last few months, the stock plummeted, going from its 52-week high of $133.86 in May to its 52-week low of $27.58 heading into earnings. That's a near 80% drop. So with expectations at rock bottom, even a little good news could push the stock up, and management believes it did more than that. CEO Abel Avellan said that the company “made real progress on every front that matters,” referring to service, launch capability, government, and capital. But investors weren’t convinced.
About AST SpaceMobile Stock
AST SpaceMobile is basically trying to put cell towers in space. Its satellites connect straight to regular smartphones, so people can get service even where there are no towers around. The company already works with big carriers like AT&T (T), Verizon (VZ), Vodafone (VOD), and now Rakuten, and it's planning to switch on its U.S. service before the year ends. Founded in 2017, AST is headquartered in Midland, Texas, and is led by founder, Chairman, and CEO Abel Avellan.
AST stock has crashed roughly 50% this year, far underperforming the broader Procure Space ETF’s (UFO) 10% gain during the same period. The stock's struggle this year has mainly been due to repeated fundraising, increasing dilution fears. Analysts also questioned how quickly users will adopt the service, with Starlink as a strong rival.
AST SpaceMobile is challenging to value on usual measures since it isn't profitable yet. The forward price-to-earnings (P/E) isn't meaningful, and analysts don't expect the company to turn a profit until 2029. The forward price-to-sales (P/S) ratio of 66.13x is extremely high, which shows how much of the stock's value rests on future growth rather than today's revenue. The EPS outlook points to losses widening this year before narrowing in 2027 and shrinking sharply in 2028. The balance sheet is decent, with the company carrying $2.99 billion in debt against $2.29 billion in cash. Because there's so much riding on the future, I believe the U.S. service launch is even more crucial. If it goes well, it would be the first real proof that those growth hopes are somewhat justified.
The Bright Spots in a Weak Quarter
AST expects to switch on its service across the U.S. before the end of this year. It will be patchy at first, since there aren't enough satellites yet for constant coverage, but it will be the first time we get to see whether people use it. More satellites are ready and waiting on a launch date from SpaceX (SPCX), which should make coverage less patchy over time. The company's government business is growing as well. AST won a U.S. Space Force contract worth about $100 million, its 16th U.S. government award. Its cash, including restricted cash, also increased from $2.7 billion last quarter to $3.2 billion. Another big update was regarding its own rocket. The company landed a $1.3 billion Firefly engine deal that lets AST build Blacklift, a reusable rocket targeted for late 2028. Currently, it depends on rivals like SpaceX for launches. Having its own rocket would mean that AST gets to control its launch schedule.
Why the Market Still Punished the Stock
AST reported a net loss of $132.4 million in Q3 and $554.3 million over the first nine months of the year. For the next quarter, it expects to spend another $400 million to $500 million on equipment and launches. It's also facing a class action lawsuit. The company allegedly played down how much new debt and dilution its plans needed. It has repeatedly raised money by selling convertible notes, which can turn into new shares. Another risk comes from SpaceX's Starlink. The industry leader is also building satellite-to-phone service, and it has far more satellites in orbit.
What Do Analysts Expect for ASTS Stock?
Based on 15 Wall Street analysts, ASTS stock holds a consensus “Moderate Buy” rating with a mean price target of $68.98. Since the stock has dropped so hard this year, the mean target now indicates a massive 90% upside, and even the lowest price target sits above the current share price. This suggests that analysts largely believe the stock has plenty of room to run from here.
On the date of publication, Jabran Kundi did not directly have a position in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.