Shares of satellite telecommunications company AST SpaceMobile (ASTS -8.55%) rose 15% through 10 a.m. ET Friday morning after yet another Wall Street analyst hiked its price target. By 11 a.m., though, the stock had turned tail and plunged 8.5%.
Why the pop and why the drop? TheFly.com notes Scotiabank analyst Andres Coello raised his target on AST to $28 today. That sounds like good news, and Coello insists the stock will outperform. Problem is, AST stock already costs $35 per share, so this is also sort of bad news.
ASTS AST SpaceMobile
NASDAQ · As of 4:00 PM ET 10/16/26
AST has got space momentum
On Wednesday, AST confirmed plans to launch five Bluebird communications satellites in the first half of September.
There are caveats. Five satellites aren't a lot. AST needs 20 to cover the whole U.S., and 168 satellites to cover the world. These first five will only enable beta tests of 5,600 calls at a time. And while phone calls can be nationwide, coverage is not continuous -- i.e., there will be dead zones.
To expand these capabilities, AST is building 17 more satellites for later launch.
Is AST stock a buy?
To pay for this, AST is raising cash, and now has $287.6 million on hand, up $75 million from last report. What worries me, though, is the rate at which it is burning cash.
In its most recent 10Q filing, the company reported $64.3 million in negative operating cash flow year to date, and $61.8 million in capital spending -- so negative free cash flow of $126.1 million. But Wednesday's update said that "we have incurred approximately $347.5 million of gross capitalized property and equipment costs" in the first half of the year -- which seems to imply a much faster rate of cash burn.
Meanwhile, building out the whole fleet of 168 comsats is still expected to cost the company $5 billion in cash that it doesn't currently possess. Until we get a better handle on how AST will pay for all these, it's hard to call its stock a buy.
