Yesterday's stock market sell-off hurt a lot of stocks, but AST SpaceMobile (ASTS -1.29%) wasn't one of them. Defying the market rout, shares of the start-up space company promising satellite internet to any off-the-shelf cellphone all 'round the world rose 0.4% Monday -- after announcing some positive FCC news. AST shares seemed likely to continue rising today, gaining nearly 5% in early trading.
But then AST stock gave it all back.
As of 11:55 a.m. EDT, AST stock is down 0.4% Tuesday. In fact, it's sitting right back where it was at the end of last week. The questions for investors today are:
- Why did the stock pop in the first place?
- Why is it dropping now?
- And what comes next for AST SpaceMobile?
Why pop?
The first answer is easy. The Federal Communications Commission (FCC) yesterday granted AST an initial license to provide communications services in the U.S. from five commercial BlueBird satellites. The space communications company called this "a significant step" toward providing 100% nationwide cellphone coverage from space.
Why drop?
But put the emphasis on "step" because five satellites is only a start. AST actually needs closer to 20 satellites to cover all of the U.S. It ultimately plans to launch 168 satellites to provide global coverage -- at a cost probably approaching $5 billion.
That could be a problem because AST actually has only about $210 million in the bank (and $174 million in debt). U.S. telecom partners AT&T and Verizon have promised to contribute a few hundred million to the effort, but that still leaves a big funding hole that AST must find a way to fill.
What comes next for AST stock?
So to sum up, AST got some great news this week. It has permission to start providing cellphone service from space, and it has at least a few satellites available to start the work. Success isn't assured. Investors need to keep a close eye on AST's cash reserves, for AST will live or die based on whether it can find the cash it needs to succeed.
