Unknown stock rose by over 500 percent – and beats Nvidia
AST SpaceMobile has seen impressive stock growth of 562 percent in the past year.
The company builds satellites to create a cellular network in space so that smartphones can connect directly to satellites.
Despite high capital requirements and delays in satellite launches, bank analysts are optimistic about AST SpaceMobile's long-term positioning.
While all eyes are currently on Nvidia, another, almost unnoticed success story is unfolding in the background: AST SpaceMobile.
The stock has experienced strong growth in the past year. If you had bought shares in the satellite company a year ago, your profits would be 562 percent (As of August 29, 2024 before stock market opening)At times, growth was even as high as 800 percent.
But what is behind the share price that has risen over the past year? And what do the banks think about it? Let's take a closer look at the company.
This is what AST SpaceMobile does
AST SpaceMobile is a US company that is working on building a mobile network in space. It was founded in 2017 in the US state of Texas. The goal: to connect smartphones directly to satellites so that you can have reception anywhere in the world – even in the most remote corners where there is otherwise no network.
The heart of AST SpaceMobile is the “BlueWalker” project. This involves a group of satellites that will orbit the Earth in low orbit. The company wants to use these celestial bodies to form a global network that will enable mobile phone signals to be transmitted directly between satellites and cell phones without having to rely on conventional transmission towers.
The company reached an important milestone in 2022 with the launch of its first prototype satellite, “BlueWalker 3”. This satellite will be used to test the technology that will later be used for the entire network.
But BlueWalker is not the company's only product line. The company's new model, BlueBird Block 1 (BB1), is built to have ten times more power than the BlueWalker-3 prototype. This seems to convince not only investors but also customers.
The company wins major partners in the USA
The niche market of satellites seems to appeal to major customers: AST SpaceMobile already has large telecommunications service providers on board to integrate its technology into existing mobile networks. One showcase example is a cooperation with the provider AT&T in the USA.
According to customers, the potential is great: “Space-based direct-to-mobile technology is designed to provide connectivity to our customers by complementing and integrating our existing mobile network,” said Jeff McElfresh, COO of AT&T, in a statement. This agreement is “the next step” for the telecommunications company.
Growth does not come without challenges
But despite strong cooperation and innovative technology, the company faces some challenges that cannot be ignored.
The company has a high capital requirement because it has to build and launch a significant number of satellites. According to estimates, the total cost of a full constellation of 168 satellites could be almost $5 billion, reports the financial site “Motley Fool“.
In addition, AST currently has a significant cash burn of over $300 million per year, which could lead to financial difficulties in the medium term if new financing is not raised.
In addition, there are apparently delays in the satellite launch schedule. In 2022, CEO Abel Avellan wrote: “We currently plan to begin our first commercial satellite launches for the BB1 satellites in the last quarter of 2022 and continue in the first to third quarters of 2023.” Although these satellites were launched in August 2024 to the airport in the US state of Florida, none have taken off yet.
What the bankers say about the share
The market seems to be pleased with the stock. Bank analysts are also optimistic about AST SpaceMobile, although they still consider the company to be risky.
In its latest report from April, Deutsche Bank emphasizes that AST SpaceMobile has made some important steps forward in the past quarter. The company has made great progress in securing financing for satellite construction and launch, has concluded new commercial deals and has made progress in obtaining the necessary regulatory approvals. Overall, Deutsche Bank is confident that AST is well positioned for the long term.
UBS analysts also have confidence in AST SpaceMobile and recommended buying the shares on August 14. Despite the risks they see, they are optimistic: in particular, the first regulatory approval in the USA, the upcoming launch of commercial satellites and the progress in partnerships make UBS believe that AST SpaceMobile can successfully implement its plans.