AST SpaceMobile successfully sends its first five satellites into orbit.
AST SpaceMobile (ASTS 12.50%) achieved a long-awaited milestone yesterday, and shares are rocketing higher today. The launch of its first commercial satellites represents the start of a planned network that will be the first and only satellite array to bring the internet directly to standard, everyday smartphones.
Investors are pouring into the stock today after the launch. As of 2:05 p.m. ET, AST shares were higher by 12.3%.
More space launches to come
Yesterday’s successful launch was not a surprise development. In fact, if things hadn’t gone smoothly, it’s likely AST shares would have cratered after the news came out. The stock actually declined yesterday by more than 4% after paring a larger decline in what could be looked at as a “sell the news” reaction.
But many investors viewed 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 major telecom companies including AT&T and Verizon Communications as customers as well as investors. AST estimates that about 3.7 billion people who have cellular subscriptions aren’t subscribed to cellular broadband, and it aims to help fill that gap in the market.
The opportunity is why investors drove AST SpaceMobile shares higher by more than 50% in the last month ahead of the big launch. And that’s where one concern should lie with buyers of the stock. The company still has much more capital to spend to build out its network. And it isn’t yet bringing in meaningful revenue.
But for now the focus is on the successful start of building out its important satellite array. AT&T chief operating officer Jeff McElfresh summed up the accomplishment this way:
This moment has been several years in the making, and I am proud of our teams’ work, in collaboration with AST SpaceMobile, to help make space-based connectivity a reality.
Already having agreements with more than 45 cellular network operators covering nearly 3 billion existing subscribers is what is attracting investors. For aggressive investors, that makes the stock worth owning.
Howard Smith has positions in AST SpaceMobile and AT&T. The Motley Fool recommends Verizon Communications. The Motley Fool has a disclosure policy.