3 reasons to buy AST SpaceMobile stock like there’s no tomorrow

AST SpaceMobile (ASTS 0.41%) is about to go from a company with big dreams to one that turns dreams into reality. This is a pivotal moment for the company and its partners, which include telecom giants such as AT&T (T -0.23%) and Verizon (See -0.16%). If you don’t mind taking on high-risk investments, now is probably the time to start getting excited about the long-term future of AST SpaceMobile.

AST SpaceMobile is not for the faint of heart

Before going anywhere, investors should understand that AST SpaceMobile is a high-risk investment. As of September 12, 2024, the company didn’t even have a service to sell. He just had the big dream of creating a space-based cellular broadband network. And while it now has five satellites in orbit that can support a service, that’s just a drop in the bucket here. The company estimates it needs at least 95 satellites to provide the full service it hopes to offer.

Image source: Getty Images.

Management has put a price on the company’s expansion plans. The next 20 satellites are estimated to cost about $400 million to build and launch. Quick math will tell you that the price for each additional satellite is $20 million. That’s a lot of money. If you extrapolate that to the 90 additional satellites that will be needed for the company to provide full service, the price comes to about $1.8 billion. It’s even more money… and it generously assumes that inflation won’t raise the price.

It’s very likely that AST SpaceMobile’s income statement will be oozing red ink for years. This is probably not something a risk-averse investor will find attractive. Only aggressive investors should look at AST SpaceMobile.

1. AST SpaceMobile did something big

That said, if you’re an aggressive growth investor, well, AST SpaceMobile has clearly just hit a very important development milestone. He finally has a real service to sell. However, that fact alone isn’t why investors should be so excited about the company’s long-term prospects. It is one of many factors, but it addresses a company that is performing well.

2. AST SpaceMobile has a good business plan

A key part of AST SpaceMobile’s business plan is to create a service that can be sold to many different telecommunications providers. There are two big takeaways from this. First, by partnering with large telecommunications providers, it gets to access a pre-existing group of mobile phone customers. Unlike competitor Starlink, which is basically trying to go it alone, AST SpaceMobile won’t need to build its own customer base.

Second, AST SpaceMobile can milk its partners for money to help pay for the huge costs of building a worldwide satellite network. It will likely still need to raise more funds from investors, which could dilute existing shareholders, but having deep partners is a clear benefit to the company’s long-term success.

3. AST SpaceMobile has a long list of potential customers

That’s why it’s so remarkable that AST SpaceMobile has already partnered with AT&T and Verizon. In fact, AT&T COO Jeff McElfresh even added a quote to the press release announcing the launch of the first five satellites. According to McElfresh, “This is the next exciting step towards a future where our customers will only be hard to reach if they choose to be – giving them the power to go anywhere and the ability to do anything, staying connected with just a day of day. mobile phone.”

ASTS data by YCharts

That pretty much sums up the opportunity here. But in addition to these two industry giants, AST SpaceMobile has agreements with a number of other companies around the world. It believes all its deals will give it a long-term target market of 2.8 billion potential customers. Assuming AST SpaceMobile can continue to do well operationally, there appears to be huge potential for the business as it grows over time.

AST SpaceMobile is going to be a wild ride

To repeat the warning: AST SpaceMobile is a high-risk stock suitable only for aggressive investors. This is highlighted by the fact that shares are now down 25% from their 52-week highs. But even after this drop, they are up over 600% in the last 12 months! Growth stocks normally have a jagged upward trajectory. If you have the strength to withstand such price swings, now might be the time to buy AST SpaceMobile as it continues to build a bigger and better tomorrow.