What happened
Shares of recent IPO and make-every-mobile phone-a-satellite phone space company AST SpaceMobile (ASTS 1.83%) stock dropped 6.5% in 1 p.m. EDT trading Wednesday. And yet, the news on AST this week doesn't exactly seem of the "bad" variety. To the contrary, it kind of sounds pretty good.
As AST announced yesterday, it has signed a "memorandum of understanding" with the "leading mobile services provider" in the Philippines -- Smart Communications -- whereby the two companies plan to "explore opportunities to extend SpaceMobile cellular broadband connectivity to the Philippines mainland, islands and surrounding waters after the service is launched."
Image source: Getty Images.
So what
As AST CEO Abel Avellan explains, the aim of this and similar collaborations will be "to offer affordable broadband cellular access to ... approximately 1.4 billion mobile subscribers ... for the first time ever," including in this case "approximately 70 million Smart subscribers."
Now what
On the other hand, a couple of things have to happen before that can happen, including notably "execution of definitive agreements" with Smart Communications (because, remember, this is just a memorandum of understanding and not an actual contract) and even more importantly, "successful launch of the SpaceMobile service."
And of course, implicit in this statement is the acknowledgement that so far at least, AST has not launched its service (or the satellites that it hopes will support the service). Until AST does get those satellites in orbit and its service under way, the stock will continue to suffer from occasional bouts of doubt that its product is anything more than vaporware. And investors can expect to suffer, from time to time, declines such as the one we're seeing today.
