Market reaction to AST SpaceMobile (ASTS) Q4’s mixed results yesterday was negative, sending the stock down 5.5%. Yet, the company’s new joint venture with Vodafone (VOD), named SatCo, suggests a promising turn. The venture intends to utilize AST’s BlueBird satellites to offer complete geographic coverage in every part of Europe. SatCo will distribute AST’s satellite services to European telecom providers, integrate terrestrial and satellite communications, and allow other European mobile operators to participate. Recently, AST made significant strides by securing a $43 million revenue contract with the U.S. government and another with Vodafone that stretches until 2034. Despite these advancements, investors are concerned about the company’s revenue growth, funding strategy, and competitive positioning in the burgeoning direct-to-device satellite connectivity space.
Rapidly Expanding Coverage
AST SpaceMobile is creating the world’s first global cellular broadband network in space, which is designed to work seamlessly with standard, unaltered mobile devices. This innovative project, backed by an extensive IP and patent portfolio, is aimed at commercial and government usage. It is a response to the current challenge of connectivity gaps experienced by five billion mobile subscribers globally to provide broadband access to those still unconnected.
SpaceMobile has agreements with about 50 mobile network operators globally, accounting for nearly 3.0 billion subscribers worldwide. The company has achieved full operational status for the first five BlueBird commercial satellites and has successfully conducted capability demonstrations of two-way video call transmission with major providers like AT&T, Verizon, and Vodafone.
SpaceMobile has made considerable strides in its commercialization efforts, as marked by new collaborations with Vodafone and the U.S. Government. The commercial agreement with Vodafone, in effect until 2034, will allow SpaceMobile to provide its service in over 20 countries throughout Europe and Africa. Moreover, SpaceMobile has secured a contract for $43.0 million in forecasted revenue with the U.S. Space Development Agency (SDA) following successful trials on BlueWalker-3.
In a bid to strengthen its position within the broader wireless ecosystem, SpaceMobile has struck an agreement for long-term access for up to 45 MHz of premium lower mid-band spectrum in the U.S., allowing peak data transmission speeds of up to 120 Mbps nationwide. This would potentially enhance partnerships with mobile network operators, extending potential subscriber capacity and services in the U.S.
Mixed Results but Bullish Outlook
For the fourth quarter, AST SpaceMobile reported revenue of $1.92 million, which fell short of analyst expectations by $0,46 million. Adjusted operating expenses saw a downward trend, settling at $40.8 million for the quarter, compared to $45.3 million in the third quarter. GAAP earnings per share (EPS) of -$0.18 was in line with analyst forecasts.
As of the end of 2024, the company has incurred approximately $460.0 million in gross capitalized property and equipment costs and an accumulated depreciation and amortization of $122.4 million. However, the company reports a robust financial position with cash, cash equivalents, and restricted cash amounting to $567.5 million.
Analysts following the company remain bullish on the stock. AST SpaceMobile is rated a Strong Buy overall, based on the recent recommendations of three analysts. The average price target for ASTS is $28.40, which represents a potential upside of 10.85% from current levels.
