In its Q2 earnings call, AST SpaceMobile, Inc. (NASDAQ: ASTS) revealed a series of exciting news regarding its revolutionary satellite technology. The most exciting news is that the company has fully funded the construction of its first 5 BlueBird satellites representing Block 1. These 5 satellites are set to be launched in Q1 2024 and will be followed by 20 additional satellites representing Block 2 which will be launched throughout 2024 and 2025. In addition, the company hinted at potential investments through equity-linked payments and non-dilutive payments to further fund its endeavors. With the company also hinting at the possibility of securing government contracts, ASTS stock could be a smart long-term investment at current levels.
ASTS Stock News
New Milestones
Earlier in April, ASTS achieved a historical milestone by making the first-ever space-based voice call directly to an unmodified Samsung Galaxy S22 using its BlueWalker 3 satellite. That is a huge milestone for ASTS and the industry alike which validates its technology and means that now ASTS knows that it can move forward with its roadmap. ASTS is planning to launch its Block 1 satellites in Q1 2024 and has already agreed with SpaceX to launch Block 1 on a dedicated Falcon 9 rocket.
Moreover, ASTS and AT&T (NYSE: T) made fillings regarding a spectrum lease agreement that covers the vast majority of AT&T’s low-band spectrum assets, which would enable ASTS to use them in its space mobile service. AT&T and ASTS also submitted multiple comments for the ongoing rulemaking process for supplemental coverage from space, which indicates a long partnership between the companies.
Following its first-quarter earnings, ASTS was announced to join the Russell 2000 and Russell 3000 indexes on June 26. The inclusion of ASTS stock in the Russell indexes is a huge milestone for ASTS since it will expose it to more institutional investors, potentially increasing its value further, especially since it is already up 31% year to date.
Short Data
While short interest has decreased for ASTS stock by almost 8% since November 2022, ASTS stock is still seeing a high short interest rate despite the multiple milestones it has achieved in Q1.
ASTS stock is highly shorted with a short interest of 23% and 25% of its float on loan. At the same time, utilization rate remains high at 100% which may see ASTS soaring when it joins the Russell 2000 and Russell 3000 indexes later this month since short sellers might be forced to cover their positions.
*Updated June 22, 2023
Another Milestone
ASTS reached another milestone after it confirmed 4G capabilities for everyday smartphones directly from space, and has reached initial speeds up to 10.3 Mbps. That, coupled with ASTS making the first direct voice connection to its satellite, would mean that the company has the capability to connect people no matter their location which would be a huge leap in the communication space. Furthermore, ASTS intends to test the enablement of 5G cellular broadband as a major milestone which would be a huge accomplishment given the slow global adoption of 5G.
Updated Short Data
Despite ASTS recently announcing multiple milestones, its short interest has increased to 24.02% and nearly 26% of its float on loan, with a 100% utilization rate. The new announcement of BlueWalker 3 4G capabilities raises the possibility of ASTS stock skyrocketing due to a short squeeze.
*Updated August 21st, 2023
Promising Developments
ASTS’ pre-revenue phase may soon be behind it since it is on track to launch more than 5 satellites in 2024. These satellites include the 5 BlueBird satellites from its Block 1 in addition to some of the 20 Block 2 satellites. The company is also in a perfect position to utilize these satellites right away as it currently has more than 40 MOUs with network operators across the world. In this way, the company would be able to service up to 2.4 billion subscribers once all of its satellites are operational.
With this in mind, ASTS forecasts to spend around 3 months testing and calibrating these satellites in orbit. In this way, it could be safe to assume that the company may start generating revenues from Block 1 in late Q2 or early Q3 2024. Through these 5 satellites, the company not only expects to offer broadband services, but it is also anticipating other governmental and other types of applications.
On that note, ASTS expects Block 1 to have very strong governmental applications thanks to its IP as well as the size and power capabilities of its satellites in low Earth orbit. As is, the company is in the process of evaluating opportunities on the government side at the same time it is focusing on broadband applications. For this reason, a government contract or grant may not be out of the question which would provide the company’s prospects with a massive boost.
Given this information, as well as the impressive nature of ASTS’ satellites, it should come as no surprise that multiple companies are seeking to own a stake of ASTS. One of which is likely AT&T Inc. (NYSE: T) given its involvement in ASTS’ operations. T has previously assisted ASTS with its R&D by leasing its electromagnetic spectrum to ASTS which was critical for testing bluewalker 3. Due to the company’s close partnership, it is very possible that one of the interested parties the company hinted at is T. Moreover, the company may emerge as a buyout target for T to capitalize on its impressive technology, however, such a deal may not take place until the company’s satellite network is complete.
Liquidity
ASTS also announced a comprehensive financing package that will provide it with up to $179 million in cash – further improving its liquidity. This package comprises around $100 million in senior secured notes, $15 million in equipment-backed loans, $57 million obtained in stock offering last June, in addition to $7 million acquired during an ATM program. Through this extra liquidity, the company may accelerate the development of Block 2 which could see it launch a substantial portion of the 20 satellites in 2024.
ASTS Stock Financials
Q1 2023
In its Q1 2023 report, ASTS’s assets decreased 15% QoQ from $268 million to $227 million, and its cash and cash equivalents decreased 22% QoQ from $238 million to $185 million. ASTS’s total liabilities increased by 6% QoQ from $78 million to $83 million.
ASTS didn’t realize any revenue in Q1 after it had achieved 2.4 million in Q1 2022. Operating costs increased almost 37% from $32 million to $44 million, which contributed to the operating loss decrease of 88% YoY from $5,467 thousand to $646 thousand, which amounted to a net loss of $45 million – an 18% increase YoY.
Q2 2023
According to its Q2 2023 report, ASTS’ assets decreased QoQ from $438 million to $408 million due to its cash balance shrinking from $238 million to $190 million. That said, it is worth noting that this figure is likely not an accurate estimate of the company’s current cash balance due to its recently announced financing package. Assets aside, liabilities also decreased QoQ falling from $78 million to $72 million due to dwindling accounts payable and warrant liabilities.
The company’s expenses increased substantially YoY from $35.4 million to $58 million due to engineering services costs which almost doubled from $11.99 million to $22.81 million. As a result of the company’s increasing expenses and lack of revenue, its net loss increased from $8 million to $49.5 million. These bearish indications in the income statement are not as worrying as they may seem since the company is set to start generating revenue in Q2 or Q3 2024 which should rejuvenate its financials.
Media Sentiment
@spacanpanman is excited about ASTS’ future prospects following its Q2 earnings call.
@CatSE___ApeX___ is bullish on ASTS’ technology.
Technical Analysis
ASTS stock is in a neutral trend with the stock trading in a sideways channel between $3.64 and $4.11. Looking at the indicators, the stock is trading below the 200 and 50 MAs which is a bullish sign, but is holding the 21 MA support which is a bullish sign. Meanwhile, the RSI is neutral at 44 and the MACD is neutral as well.
As for the fundamentals, the anticipated launch of Block 1 in Q1 2024 is a major catalyst for the stock since it would allow the company to start realizing revenues. Considering the company’s potential to secure government contracts, its outlook appears to be bright in the long term once its network is complete. With the stock holding its 21 MA support, investors could find the current PPS a good entry ahead of the launch of Block 1 as the stock could fill the gap near $6.2 with a successful launch.
ASTS Stock Forecast
Currently, ASTS is the only company with satellite tech capable of directly connecting with mobile phones. Despite it being in its pre-revenue phase, the company is well off since it recently completed a financing package and has received indications from interested parties which might lead to a sizable investment. The company is also poised to launch its first 5 BlueBird satellites in Q1 2024 and actualize revenue in Q2 or Q3 2024. Taking all that into consideration, ASTS stock is likely to climb to new heights – making its current PPS a bargain for long-term investors.
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