Is the market having the right reaction to AST SpaceMobile’s recent third-quarter report?
The stock of AST SpaceMobile (ASTS -12.65%) is seeing big sell-offs in Friday’s trading following the company’s recent third-quarter report. The space-based telecom’s share price was down 13.8% as of 11:45 a.m. ET today. Meanwhile, the S&P 500 index was down 1.3%, and the Nasdaq Composite index was down 2.1%.
AST published third-quarter results after the market closed Thursday, posting sales that came in slightly ahead of expectations and a much wider than expected loss. The business posted a loss of $1.10 per share on revenue of $1.1 million in the period. The average analyst estimate had called for a loss of $0.20 per share on revenue of $1 million.
Besides the loss coming in bigger than expected, macroeconomic concerns are also weighing on the company’s valuation today. Federal Reserve chairman Jerome Powell recently said that the U.S. central banking authority was “in no rush” to cut interest rates. As a result, the broader market is seeing a pullback — and many growth-dependent and otherwise speculative stocks are seeing particularly pronounced retreats.
Is today’s sell-off for AST SpaceMobile a buying opportunity?
AST posted a loss of roughly $171.9 million for shareholders in the third quarter and closed out the period with cash and equivalents totaling $518.9 million. The company is still focused on growing its number of satellites and expanding its space-based cellular broadband network — and it’s generating little in the way of revenue.
While the loss came in much bigger than expected in the quarter, the performance probably doesn’t say much about the company’s long-term viability. On the contrary, it could signal that the business is actually ahead of schedule with some of its research and development, manufacturing, and deployment initiatives.
The company will likely need to raise new funding through stock offerings, debt, or other sources in the near future, but it’s continuing to post some encouraging progress. Most notably, the telecom innovator has secured new launch service agreements and is on track to send roughly 60 satellites into orbit from Cape Canaveral in 2025 and 2026.
AST SpaceMobile is seeing a big valuation pullback today, but the company’s disruptive potential remains intact. For investors who were looking for an entry point into the stock, the retreat could be a worthwhile buying opportunity.
Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.