What happened

AST SpaceMobile (ASTS 1.83%) has cleared a key milestone in its effort to connect terrestrial mobile phones via a satellite-based network, and investors are celebrating the accomplishment. Shares of AST climbed as much as 19% on Tuesday after the company outlined its accomplishment.

So what

AST is a space stock focused on solving a particularly vexing problem. The company is developing technology that would allow modern cellular phones to communicate with its satellites, which, if successful, has the potential to eliminate so-called "dead spots" common with terrestrial cellular networks and expand connectivity to new areas.

On Tuesday, the company said its engineers successfully placed a call from Hawaii to Spain, the first-ever connection for voice and data using satellites to achieve modern 5G network quality and speed. The call was placed on Sept. 8 using an unmodified Samsung phone in an area that has no cellular service.

"Once again, we have achieved a significant technological advancement that represents a paradigm shift in access to information," CEO Abel Avellan said in a statement. "We are more confident than ever that space-based cellular broadband can help transform internet connectivity across the globe by filling in gaps and connecting the unconnected."

Now what

This is an impressive milestone, and investors have good reason to celebrate. But they should also keep in mind that AST still has a long way to go before the company can be declared a success.

Demos are great, but the real test of these networks will be when they are fully deployed and have to manage through the complexity and bottlenecks of multiple users. That won't happen until AST spends significant sums to build out its network and initiate service. And the terrestrial cellular companies that AST is hoping to disrupt continue to invest in their technologies and infrastructure as well.

If all goes to plan, AST could end up a big winner. But for now, this is a stock with both a lot of promise and a lot of risk. This is an important step in AST's development, but investors would be wise to limit this to a small piece of a well-diversified portfolio.