Should ASTS Be in Your Portfolio Post Lackluster Q3 Earnings?

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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