1 Top Space Stocks You Need to Know About Before a Key Release in September

Long-term investors should not make decisions about buying or selling a stock based on a single event. Data from a quarterly earnings report, for example, should be monitored, reviewed and added to an investor’s mental database. But a quarterly report is only a single snapshot of the company’s business.

However, just in case AST SpaceMobile (ASTS -0.72%)there is an upcoming event that investors looking for a growth opportunity should pay close attention to. The company is preparing to launch its first set of commercial broadband satellites. Those five satellites represent the commercial start of what could become one of the largest global telecommunications companies in the coming years.

Untapped potential for mobile connectivity in space

AST’s patented technology will provide mobile phone providers around the world with broadband internet access to connect those without internet service. The market for this could be huge. AST estimates that there were 5.5 billion cellular subscribers worldwide at the end of 2022, and 3.5 billion of them were not mobile broadband subscribers. The opportunity it presents helps explain why the stock has exploded by about 600% over the past 12 months.

Importantly, AST SpaceMobile is building the first and only global space-based cellular broadband network that works directly with mobile devices. It aims to connect standard mobile phones directly to satellites, bypassing the need for ground-based infrastructure such as cell towers. The satellite network could improve connectivity to the billions of existing mobile phone subscribers, in addition to providing service to those currently unconnected.

AST SpaceMobile’s service also differs from SpaceX’s Starlink in that it would connect directly to regular smartphones without any additional hardware. Existing mobile devices will be all users need. Starlink requires users to have a satellite dish for connectivity. That antenna must be purchased, then set up and pointed at the satellites to access the Internet.

September 11 release window

Somewhat ironically, while SpaceX’s Starlink service will compete with AST, a SpaceX Falcon 9 rocket is scheduled to launch AST’s first five BlueBird satellites during a launch window that begins on September 11.

This release also highlights the complex relationships between companies and regulatory bodies in the evolving space sector. In May, AST announced a new commercial agreement with AT&T to deliver its broadband space network directly to existing mobile phones. AT&T COO Jeff McElfresh explained the relationship this way:

Direct-to-mobile space technology is designed to provide connectivity to customers by complementing and integrating with our existing mobile network. This agreement is the next step in leading our industry to use emerging satellite technologies to deliver services to consumers and in locations where connectivity was not previously feasible.

Mobile network operators such as AT&T and Verizon Communications they will be both competitors and partners with AST SpaceMobile. These network operators spend more than $300 billion annually in capital expenditures and nearly $70 billion on cell tower leases, according to a Scotiabank report. This eats up an enormous amount of free cash flow, giving those companies a good reason to partner with AST for the planned global satellite constellation.

Early for valuation estimates

As with other companies trying to commercialize emerging technologies, it’s difficult to properly capitalize on AST SpaceMobile at this early stage. Its market value was recently around $7.5 billion. The aforementioned network operator costs exceed this value.

The opportunity to increase carrier coverage for mainstream smartphone users and potential government contracts is vast. But there are a lot of obstacles to overcome. This includes successfully passing the initial BlueBird launch.

Any issues with this launch could have a negative impact on AST’s share price in the short term. Regulatory issues will also need to be addressed, as governments need to ensure that the networks of different satellite operators can coexist without causing harmful interference to each other.

But the AST SpaceMobile has enormous potential. Even with SpaceX’s Starlink way ahead in terms of the number of satellites it has in orbit, there are separate markets that will be tapped by AST. Starlink largely targets broadband internet users in remote or rural areas. AST will focus on mobile connectivity for the billions of current and potential mobile phone users.

That makes the stock a worthwhile speculative investment for aggressive investors. Given that its thesis has so many moving parts, the stock is a good candidate for a cautious buy strategy; I would suggest those looking to take the full position by buying in thirds. The most notable of these variables is the upcoming scheduled release. For those interested in this space growth stock, that BlueBird release will be worth monitoring.