Why AST SpaceMobile Shares Soared on Friday

AST SpaceMobile (ASTS 12.62%) hit a long-awaited milestone yesterday, and shares are soaring today. The launch of its first commercial satellites marks the start of a planned network that will be the first and only satellite system to bring the Internet directly to standard, everyday smartphones.

Investors are pouring into the stock today after the release. As of 2:05 PM ET, AST shares were 12.3% higher.

More space launches to come

Yesterday’s successful launch was no surprise development. In fact, if things hadn’t gone well, it’s likely that AST’s stock would have cracked after the news broke. In fact, the stock was down more than 4% yesterday after paring a larger decline in what could be seen as a “sell the news” reaction.

But many investors saw that initial reaction as a buying opportunity. That’s because the potential market for AST’s eventual satellite network is enormous. The company already counts large telecommunications companies, including AT&T and Verizon Communications as clients as well as investors. AST estimates that around 3.7 billion people with mobile phone subscriptions do not subscribe to cellular broadband and aims to help fill this gap in the market.

The opportunity is why investors have driven AST SpaceMobile shares up more than 50% in the last month before the big launch. And here should be a concern of stock buyers. The company still has a lot more capital to spend to build out its network. And it still doesn’t bring in significant revenue.

But for now the focus is on successfully starting to build its important satellite array. AT&T COO Jeff McElfresh summed up the achievement this way:

This moment has been several years in the making and I am proud of the work of our teams, in collaboration with AST SpaceMobile, to help make space connectivity a reality.

Already having agreements with more than 45 cellular network operators covering nearly 3 billion existing subscribers is what attracts investors. For aggressive investors, that makes the stock worth owning.