Dj Ast Spacemobile Inc Cl A, Inst Holders, 3Q 2024 (Asts)

Recently, CNBC Mad Money host Jim Cramer reviewed a few stocks that have soared sky-high this year. Cramer stated that while investors may have dismissed these stocks as speculative, they were actually smart investments. While he adds he's not recommending them at current “frothy” levels, he said, "These names are often the epitome of speculating wisely, which can be the key for terrific long-term performance — of course, only when melded with index funds."

Out of the 10 stocks Cramer reviewed, the three we are discussing today are Palantir Technologies , AppLovin Corporation , and AST Spacemobile . So far this year, Palantir stock has soared 257.3%, AppLovin has gained a mind-blowing 748%, and AST stock has gained 305%, compared to the S&P 500 Index's gain of 23.6%.

Given the massive rally, some investors may believe they missed out on these growth stocks. However, there is a lot more room for these three to grow, which could be rewarding for long-term investors.

#1. Palantir Technologies

Valued at $138.4 billion, Palantir Technologies is known for its data analytics and AIP, or Artificial Intelligence Platform, which serves both the commercial and government sectors. Both its Palantir Gotham and Palantir Foundry platforms have generated significant demand in recent quarters, resulting in robust growth.

In the most recent third quarter, total revenue increased 30% year-over-year, while adjusted earnings rose 43% year-over-year, thanks to strong growth in both commercial and government revenue. Palantir's tools are deeply embedded in the U.S. defense, intelligence, and public health systems, generating a consistent revenue stream. Its recent multi-year deals with the U.S. Department of Defense and NATO are impressive. It is also risky, because Palantir's revenue is still primarily derived from a small number of government clients.

As a result, it has aggressively expanded into the commercial space, forming partnerships with companies in healthcare, manufacturing, and finance.

Analysts who follow the stock expect revenue to rise by 25.5% in 2024 and 24.1% in 2025. Earnings are expected to rise by 51% in 2024 and 24.7% in 2025. The stock is expensive, valued at 129.7x forward 2025 earnings and 43x forward sales.

Despite its high growth potential, analysts have a neutral outlook on PLTR stock. Currently, PLTR stock is not a “buy,” but rather a “hold” on Wall Street, with many skeptics citing concerns due to its overvaluation.

While bulls argue that the company's role in AI and potential for more commercial contracts warrant a higher valuation, bears remain cautious due to macroeconomic uncertainties.

Of the 15 analysts who cover PLTR, two recommend a "strong buy," six say it’s a "hold," two rate it a “moderate sell,” and five rate it as a “strong sell.” Palantir has surpassed both its mean price target price of $33.78 and the high estimate of $57.

I believe Palantir is well-positioned to capitalize on long-term trends in data analytics, AI adoption, and digital transformation. However, due to its overvaluation, it is best suited for those with a high risk tolerance.

#2. AppLovin Corporation

Valued at $107.7 billion, AppLovin Corporation is a key player in the mobile advertising and app monetization industry. Its robust software solutions and innovative advertising technology using AI have garnered significant attention from investors in 2024.

The company operates through two segments. The software platform, AXON, uses machine learning to optimize ad placements and improve developers’ monetization. Thanks to the AXON models, the software segment contributed the most to total revenue in Q3, $835 million to be exact, an increase of 66% over the prior-year quarter.

The apps segment, which includes a portfolio of mobile games, grew 1% during the quarter. Total revenue increased 39% to $1.2 billion, while net income increased by 298.1% year-on-year to $434 million.

Analysts predict that Applovin's revenue and earnings will rise by 39.9% and 313.6%, respectively, in 2024. Revenue and earnings could further increase by 20.5% and 40% in 2025, respectively.

AppLovin's stock is expensive, trading at 56 times forward estimated earnings for 2025. AppLovin's strategic focus on AI-driven solutions, combined with its strong presence in the mobile gaming market, positions the company for long-term success. Given the stock's overvaluation, new investors may have to wait for a more favorable entry point. Other growth-oriented investors would be better off holding the stock right now.

Overall, Wall Street rates APP stock a “moderate buy.” Of the 19 analysts covering APP stock, 14 have rated it a “strong buy,” four suggest a "hold,” and one rates it a “strong sell.”

APP stock has surpassed its mean price target of $216.75. However, the stock could rally by another 16.5%, based on the high price estimate of $385.

#3. AST Spacemobile

Valued at $7.04 billion, AST Spacemobile is working to provide broadband connectivity directly to standard mobile phones via its satellite network. Its mission is to build the first space-based cellular broadband network. Despite being unprofitable, ASTS continues to attract attention due to its innovative technology and strategic partnerships.

The company's proprietary BlueWalker and BlueBird satellites are designed to communicate directly with mobile devices, allowing for seamless broadband coverage even in the most remote locations.

The recently reported Q3 loss of $1.10 per share was larger than expected. Nonetheless, this should not concern long-term investors, because it demonstrates the company's commitment to R&D, manufacturing, and deployment initiatives. Adjusted operating expenses totaled $45.3 million in the quarter.

While still in the pre-revenue stage, AST is on track with its launch services agreements to launch approximately 60 Block 2 BlueBird satellites in 2025 and 2026. AST's cash, cash equivalents, and restricted cash totaled $518.9 million at the end of the third quarter.

The global need for reliable mobile broadband is immense, with billions of people lacking consistent internet access, which makes AST an appealing long-term investment prospect. However, the company is still in its early stages. The high-risk nature of its operations and financial requirements necessitates careful consideration before buying the stock.

Overall, on Wall Street, the stock is a “strong buy.” Its mean price target of $43.67 suggests the stock can rally another 82.5% from current levels. Plus, analysts expect it to surge by 162.8% based on its high price estimate of $63.

On the date of publication, Sushree Mohanty did not have (either directly or indirectly) positions 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.

AST SpaceMobile, Inc. ASTS reported modest third-quarter 2024 results, with adjusted earnings beating the Zacks Consensus Estimate but revenues missing the same.

Net loss in the reported quarter was $171.9 million or $1.10 per share compared with a loss of $20.9 million or 23 cents per share in the year-ago quarter. Non-GAAP net income was 10 cents per share, which beat the Zacks Consensus Estimate by 28 cents. Quarterly revenues were $1.1 million, which missed the consensus estimate of $2 million.

Key Growth Drivers of ASTS

ASTS is transforming connectivity with direct-to-cell technology leveraging the first and only space-based cellular broadband network. It boasts a diverse portfolio of more than 3,400 patent and patent-pending claims worldwide for the direct-to-cell satellite ecosystem from space to Earth.

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 space-based communication services.

ASTS Collaborates With Leading Carriers

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 and avail funds to help build a worldwide satellite network. With AT&T, ASTS has entered into a definitive commercial agreement, extending until 2030, to offer 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 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.

Bluebird Satellites Propel ASTS Stock

AST SpaceMobile has successfully sent its first five commercial satellites dubbed Bluebird in low Earth orbits, marking a key advancement in developing a space-based mobile network infrastructure. 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 439.8% over the past year compared with the industry’s growth of 39.7%. It has also outperformed its peers like Aviat Networks, Inc. AVNW and Comtech Telecommunications Corp. CMTL over this period.

One-Year Price Performance

Estimate Revision Trend of ASTS

The Zacks Consensus Estimate for AST SpaceMobile for 2024 and 2025 has narrowed 5.8% and 2%, respectively, to a loss of 97 cents per share and a loss of 50 cents over the past 30 days. The positive estimate revision depicts optimism about the stock’s growth potential.

ASTS Trading at a Premium

However, the company is currently valued at a premium compared to its industry on a forward 12-month P/S basis. From a valuation standpoint, AST SpaceMobile appears relatively expensive compared to the industry and above its mean. Going by the price/sales ratio, the company shares currently trade at 77.72 forward sales, higher than 5.47 for the industry and the stock’s mean of 24.63.

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 launch of the Bluebird satellites will likely transform network connectivity and help bridge the digital divide, significantly expanding its global presence and enhancing AST SpaceMobile’s capabilities in providing ubiquitous connectivity. The uptrend in estimate revisions further portrays bullish sentiments about the company’s business model.

However, AST SpaceMobile is trading at a premium valuation.

Nevertheless, with a Zacks Rank #2 (Buy), ASTS appears primed for further stock price appreciation. Consequently, investors are likely to profit if they bet on this high-flying stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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