AST SpaceMobile (ASTS +2.76%) shares have rocketed higher by more than 1,000% over the past three years. Much of that gain has come since mid-2024, when the company's prospects for actually turning its big idea into a reality started to look more feasible.
But there's one small problem -- the company still doesn't have a fully functional service. Here's why you might want to be cautious with AST SpaceMobile.
Building a millionaire nest egg requires taking some risks
You can't simply hoard a pile of cash and hope that you'll build a seven-figure nest egg. Most people will need to take some risks, which will likely mean investing in stocks. This is where things get complicated, because the quickest way to build wealth is to pick one growth stock that goes up a lot. AST SpaceMobile's massive price advance over the past three years is an example.
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Of course, the quickest way to lose a lot of money is to buy a single stock that goes down a lot. This happens with great regularity on Wall Street, too. You'll probably have to cut the middle and create a diversified portfolio that includes safer investments along with riskier ones, like AST SpaceMobile. But why is AST SpaceMobile so risky?
The company is attempting to build a space-based mobile broadband network. Even better, that network is going to interact with current cellphones, so there's no need for end users to upgrade their tech. And AST SpaceMobile has chosen to partner with existing telecom providers, so it has access to their capital and their customers.
This looks like a pretty solid plan. And now that AST SpaceMobile is launching satellites into orbit, it seems highly likely that it will be able to create the business management has long dreamed of creating.
A lot of good news has been priced in
There's just one small wrinkle -- AST SpaceMobile is still just a money-losing start-up. Looking at the income statement, in the first half of 2025, the company brought in revenue of around $1.9 million while it spent $137.6 million. While revenue is likely to go up as more satellites get launched, costs aren't going to suddenly go away. The company hopes to put between 45 and 60 satellites into orbit between 2025 and 2026.
Each satellite costs money to build, and each launch costs money, too. AST SpaceMobile is not going to suddenly turn profitable anytime soon. In fact, the price-to-sales ratio here is a shocking 3,290 or so. That is not a typo. For reference, the S&P 500 index, which is hovering near all-time highs, has a P/S ratio of around 3.4 (which is far above the historical norm). Investors are pricing in a huge amount of good news into AST SpaceMobile's stock price right now.
NASDAQ: ASTS
Key Data Points
AST SpaceMobile has a solid business plan. It is executing well on its plan. But with Wall Street setting such high expectations, the stock could still flame out. That's the risk you take when you buy a story stock like AST SpaceMobile. And if you do buy it, it should be one part of a broader portfolio that also includes more conservative investments.
AST SpaceMobile has potential, but do not bet the house
There's no question that AST SpaceMobile is doing something exciting (it is launching satellites into space, after all). But given the huge price advance and hefty valuation being placed on what is still a money-losing business, investors should probably tread with caution. It could live up to all of the hype, but if you buy the stock, it should probably only be a small part of your portfolio.
In order for the stock to keep rising, it looks like everything might have to break AST SpaceMobile's way.
