What happened
There aren't a lot of numbers in quarterly reports from pre-revenue companies, so investors tend to focus instead on business operation updates. Satellite communications company AST SpaceMobile (ASTS 1.49%) is not progressing as fast as some investors had hoped, and the shares are off by more than 17% as a result.
So what
AST SpaceMobile is a space start-up that is attempting to build a constellation of satellites to provide 5G network connectivity to all corners of the globe. There are potential users for this technology, but the cost of getting the network up and running is prohibitive.
The company reported a net loss of $8.23 million in the fourth quarter, up from a loss of $3.11 million a year ago, on zero revenue in the quarter.
The question for investors is how long until revenue might materialize. The company said that testing of its BlueWalker 3 system has been promising, suggesting download signal strengths necessary to hit 5G, but these are still early days.
"The testing to date for BlueWalker 3 continues to validate the design roadmap for our BlueBird commercial satellites," CEO Abel Avellan said in a statement. "As we plan for the commercialization of our service, we are ramping the manufacturing of our Block 1 satellites and making key investments for Block 2 satellites."
Now what
If all goes to plan, the company hopes to launch satellites beginning in the first quarter of 2024. The company ended the quarter with liquidity of $239 million, giving it some runway to get its systems up and running, but there is a lot that could go wrong as the testing continues.
For investors, AST SpaceMobile offers both promise and a lot of risk. Space is hard and complex, and not all interesting ideas work. For those who believe in the promise, it is best to keep AST SpaceMobile as a small piece of a well-diversified portfolio.
