Ast Spacemobile Skyrockets Almost 100% After Verizon Deal
Satellite cellphones may have taken a big step forward this week after Verizon (NYSE: VZ) announced an expanded partnership with AST SpaceMobile (NASDAQ: ASTS). According to data provided by S&P Global Market Intelligence, shares of AST SpaceMobile jumped as much as 94.1% this week and are trading 79.1% higher at 3 p.m. ET.
Verizon bets big on AST SpaceMobile
The agreement between the two companies includes usage of the 850 million hertz spectrum that aims to give 100% coverage to the continental United States. Verizon will also invest $100 million in the company, $65 million of which will be commercial prepayments, and the remaining $35 million will be for convertible notes.
This doesn't get the company anywhere near free-cash-flow positive, but it's a step in the right direction.
ASTS Revenue (TTM) data by YCharts. TTM = trailing 12 months.
Hoping for the best
AST SpaceMobile still isn't a sustainable business, but the hope is that this could be a catalyst toward a growing business. Quarterly revenue for the first quarter of 2024 was zero, but Verizon is committing $65 million in revenue to the business long term. That's a solid bet, especially when combined with the AT&T deal signed earlier this year.
While this is encouraging, it's also very early for AST SpaceMobile, and we don't have end-market demand for satellite phones or service in large numbers. So, the business may never get off the ground. That's made me skeptical enough to skip the pop in shares, but it's worth keeping on a watchlist.
Should you invest $1,000 in AST SpaceMobile right now?
Before you buy stock in AST SpaceMobile, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and AST SpaceMobile wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $677,040!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of May 28, 2024
Travis Hoium has positions in Verizon Communications. The Motley Fool recommends Verizon Communications. The Motley Fool has a disclosure policy.
