AST SpaceMobile (ASTS +14.86%) has big plans and not a whole lot to show for them just yet. But that hasn't stopped it from executing well on one very important aspect of its business model: partnering with the cellular industry's leaders. There's a virtuous cycle here, though, because the more partners it has, the more likely it is to succeed. Which is why the company recently linking up with Verizon was such a big deal.
Early-stage development looks promising
AST SpaceMobile is looking to build a space-based cellular broadband network that will provide reception anywhere in the world. The key attraction of the service is that it allows customers to use the devices they already use. So there's no new fancy gear to buy and set up; just pull out your handy cellphone and use it the same way you always have. Only this time, you could be on top of a mountain or in the middle of the ocean, where there aren't any nearby cell towers.
Image source: Getty Images.
That's the plan, anyway. Right now, AST SpaceMobile has one single test satellite in orbit. It won't launch additional satellites until the end of 2024 at the earliest.
Or, to put it another way, AST SpaceMobile is still in the development stage. That means the balance sheet is likely to bleed red ink for a long time into the future even as the company has to spend vast sums to create the network it needs to produce revenue. This is not a great option if you are a conservative investor.
However, the test satellite that's in orbit was enough to prove out the technology concept. Indeed, the company successfully used the satellite and existing cellular phone technology to make space-based connections. That was an important milestone, and it set the company up to achieve another important milestone.
AST SpaceMobile partners up
AST SpaceMobile is basically competing with Elon Musk's Starlink. The most notable difference is that Starlink is attempting to go it alone, with its own hardware, while AST SpaceMobile is specifically looking to partner with existing cellphone providers. There are a few reasons for this.
First off, AST SpaceMobile will be able to tap into existing customer bases and, thus, won't have to build one from scratch.
Second, it can ask its partners for funding to help it build out its system. It partnered up with AT&T in January 2024. Not long afterward, in late May, it announced an agreement with Verizon. Both companies are lining up to be customers and are providing cash to AST SpaceMobile so it can continue to develop its network.
NASDAQ: ASTS
Key Data Points
On that score, the company announced in late July that it had completed the first five satellites for the network it hopes to build. They will be ready to ship in early August, which was a stated management goal.
Getting the satellites to the launch facility is just step one, however. The company needs to wait until there's a launch window, which is expected to come in the latter months of 2024. But the launch depends on many factors outside of the company's control, including the weather, so there are no guarantees on a final date.
That said, the dominoes are falling into place quite well at the moment. And with the extra cash being provided by large partners like AT&T and Verizon, the future looks more certain now than it did as 2024 got underway.
AST SpaceMobile is risky but increasingly less so
While AST SpaceMobile's stock is still only appropriate for more aggressive investors, given that it remains in the development stage, it is making important progress. Notably, its operational success has allowed it to ink the partnerships it requires to succeed financially over the long term. The next big step is getting more satellites into space.
AST SpaceMobile's stock has rocketed higher this year, likely because of the partnerships noted above, but there could be more upside if the news flow continues in a positive direction.
