AST SpaceMobile (ASTS), a satellite designer and manufacturer based in Midland, Texas, is developing a space-based cellular broadband network directly connecting to unmodified smartphones. Until recently, the company generated lots of excitement among investors with its Bluebird satellites, promising partners such as AT&T (T) and Verizon (VZ), aiming to provide global cellular broadband directly to your smartphone. This is very different from Elon Musk’s Starlink, which requires a special dish for connectivity; AST SpaceMobile’s technology connects directly to standard mobile phones, eliminating dead zones and ensuring seamless coverage.
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However, I did state “until recently,” as the company has been going through a rough patch. ASTS stock has been down roughly 24% in the last three months, and short sellers are circling.
Let’s briefly explore AST’s recent headaches:
Why Do the Short Sellers Want with ASTS?
Despite the buzz around its advanced tech, AST SpaceMobile has encountered some bumps on its way to space. The company’s recent $400 million convertible debt offering spooked investors, leading to a drop in stock price and attracting short sellers who see a soft spot in the company’s operations. To some, this move indicates that the company needs cash reserves, signaling financial instability. Short interest has climbed to 24.2%, the highest in two months, reflecting a bearish sentiment from investors as well.
ASTS Is Still Moving According to Plan
AST SpaceMobile is pursuing exciting new initiatives to counter these challenges. One standout is an agreement with Ligado Networks for long-term access to up to 45 MHz of lower mid-band spectrum in the U.S. This deal, expected to finalize in the first half of 2025, will boost AST SpaceMobile’s capabilities. In return, Ligado will receive 4.7 million penny warrants convertible into AST SpaceMobile shares, plus $550 million upon closing. Additionally, AST SpaceMobile will pay $80 million annually for spectrum usage rights and share long-term net revenues with Ligado. Of course, AST SpaceMobile is still partnering with major telecom operators like Verizon. In 2025, the company aims to expand its satellite constellation and improve service offerings, leveraging its unique technology to provide consumers with stabilized global connectivity.
Five-Star Analyst Is Bullish on ASTS
Despite the stock’s declining trend, five-star analyst Andres Coello from Scotiabank is optimistic about AST SpaceMobile, maintaining a Buy rating with a price target of $40.20. He highlights the company’s strong market position, strategic partnerships, and growth potential. He notes that despite recent stock fluctuations, the long-term outlook remains positive.
Additionally, ASTS scores 9 on Tipranks’ Smart Score, indicating an Outperform rating. This score combines factors like a Moderate Buy analyst consensus, bullish blogger sentiment, increased hedge fund activity, and very positive crowd wisdom. The stock’s technical indicators also show positive momentum, with a 12-month change of 560.71%.
Is ASTS a Buy on Wall Street?
On Wall Street, AST SpaceMobile is a Moderate Buy, with an average price target of $35.60, reflecting a 74.94% upside potential.
Does Short Seller Have a Point?
No, it doesn’t seem like they do. The company’s financials look solid from an outside perspective, with minimal debt and reasonable cash flow. The company’s technology garners interest from mobile operators and the new partnership with Lidago also looks promising, despite Lidago filing for Chapter 11 to ease its debt. In addition, scoring 9 on Tipranks’ Smart Score is a good indicator of short-term prospects. Overall, it seems that ASTS has a firm basis for success in the next few years.
