Investing in the stock market is an excellent way to build lasting wealth. The approach you take depends on your individual goals. For instance, you might be a bold growth investor with a long-term strategy for investing in emerging companies.
One stock that's generating a lot of buzz among growth investors right now is AST SpaceMobile (ASTS 5.05%). This company is transforming global communications by expanding its space-based cellular network. Given the booming space economy, which is projected to reach $1.8 trillion by 2035 according to the consultancy McKinsey, AST SpaceMobile could present an exciting opportunity for growth investors.
But how big is this opportunity? More importantly, can investing in AST SpaceMobile today set you up for life? Let's dive into the business and the exciting long-term opportunities that lie ahead.
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Space-based cellular service could reach billions
AST SpaceMobile is developing a global cellular broadband network in space, accessible by smartphones. This approach differs from Starlink, the satellite company founded by Elon Musk, which primarily focuses on providing internet connectivity through dedicated hardware. In contrast, AST SpaceMobile aims to provide direct-to-smartphone cellular service without requiring any additional equipment or modifications.
The company focuses on regions around the world where traditional infrastructure is either too expensive or difficult to implement. As of Dec. 31, 2024, there are approximately 5.8 billion mobile subscribers who are moving in and out of coverage. Additionally, around 3.4 billion people lack access to cellular broadband, and approximately 350 million individuals have no mobile cellular coverage whatsoever.
AST SpaceMobile has formed strategic partnerships with major telecommunications companies worldwide, which are key to the development, validation, and commercialization of its space-based cellular network. Last year, it entered into a commercial agreement with AT&T that extends through 2030.
With this agreement, AT&T gains access to AST SpaceMobile's network and satellite services, allowing it to offer enhanced services to its customers in the continental United States and Hawaii. In exchange, AT&T will compensate AST by paying a percentage of the gross monthly revenue generated from the services provided through the satellite network.
Verizon Communications also partnered with AST SpaceMobile and committed $100 million last year as part of this agreement. In addition to this collaboration, AST has also established agreements with other major companies, including Vodafone, Rakuten, and Alphabet's Google.
Keep an eye on AST SpaceMobile's cash
AST SpaceMobile has not yet generated significant revenue from its SpaceMobile service and has a history of net losses, including a loss of $300 million last year and another $46 million in Q1.
Not only that, but designing, assembling, integrating, testing, launching satellites, and building related infrastructure are all highly capital-intensive endeavors. The company needs to deploy approximately 45 to 60 of its BlueBird satellites to achieve continuous service coverage in key markets across the U.S., Europe, and Japan, which will require substantial capital investment.
At the end of the first quarter, the company had $874.5 million in cash and equivalents. It believes it is funded for operating expenses and capital expenditures necessary to design, manufacture, launch, and operate a constellation of 25 BlueBird satellites, which would be enough to help it turn free-cash-flow-positive, according to management.
Could buying AST SpaceMobile today set you up for life?
Given the anticipated growth in the space economy over the next decade, AST SpaceMobile has a promising future. Analysts project substantial revenue growth, with estimated revenue coming in at $299 million in 2026, $958 million in 2027, and $2.2 billion in 2028. They also project earnings to turn positive by 2027.
Whether AST SpaceMobile stock sets you up for life depends on several factors, including the amount you invest and your tolerance for the volatility that comes with investing in high-risk, early-stage growth companies. Investors purchasing the stock today should be prepared to be patient and maintain a long-term outlook. They should also be prepared if the venture potentially fails.
If you do invest in AST SpaceMobile at this stage, it's essential to include it as part of a diversified portfolio. While the stock has the potential to deliver excellent returns, if it fails to do so, you'll still have your other holdings to fall back on.
