SpaceMobile by AST Set for Lift-Off, but Financial Drain May Pose Issues
AST SpaceMobile's Rollicking Ride
AST SpaceMobile's stock is on a wild ride after its Q4 report. At one point, shares soared 32%, then took a steep dive, still managing to remain above their pre-report level. But fear not, it's not all good news, my friend.
Money, money, money... not the focus
Before you get too excited, this isn't a tale of soaring revenues and unexpected earnings. AST SpaceMobile was expected to lose $0.18 per share in Q4 on $2.4 million in revenue. Despite the missed revenue target, they didn't do much worse: a loss of $0.18 per share on $1.9 million in revenue. For the whole year, the company underperformed on both the top and bottom lines, finishing with a loss of $1.94 per share on $4.4 million in revenue.
But don't worry about these losses right now. With just five comsats in orbit and no permission from the FCC yet for beta testing, any revenue reported now would likely be negligible. Plus, profits are still a distant dream. So, if AST loses a bit more money than expected in the future, it ain't the end of the world for our investment thesis. What matters most is how swiftly they can expand their constellation, begin beta testing, and secure some real revenue.
BlueBirds take flight
CEO Abel Avellan was pretty excited in the Q4 release, declaring that "the many pieces of our plan are rapidly coming into place." For example, all five of AST's BlueBird commercial satellites are operational and they're already manufacturing 40 more, each one larger than the original five. They've also bought parts for at least 10 more beyond that.
On the launching front, they've got SpaceX, Blue Origin, and India's ISRO lined up to send a total of 60 satellites skyward in 2025 and 2026. This speedy satellite production and launch schedule sure suggests AST is pushing full steam ahead on its ambitious project.
AST's satellite constellation isn't just expanding, it's spreading its wings globally. They've secured agreements with 50 mobile network operators serving nearly 3 billion subscribers across more than 20 countries.
Potential obstacles ahead
If there's one thing missing from AST's report, it's a clear breakdown of costs. During the post-earnings conference call, management mentioned they have around $1 billion in cash, which they claim will keep them afloat for the next 12 months and cover the construction and launch costs of their initial 25 satellites. They also expect to receive $43 million this year from the U.S. Space Force and to become free-cash-flow positive once they have 25 BlueBirds in orbit.
All seems peachy, but S&P Global Market Intelligence reckons AST will need about $1.1 billion in capital expenditures over the next couple of years. So, while $1 billion might cover them through 2025, they'll probably need more coins in 2026 if they don't start bringing in the big bucks sooner.
In sum, AST SpaceMobile's plan is to boost their satellite constellation, start beta testing, and begin booking some genuine revenue. If they can keep the cash flowing, they might just wing their way to success. But remember, in this game, there's always a chance something could go sideways. So keep an eye on the skies, partner.
[Enrichment Data]- AST SpaceMobile expects to become free-cash-flow positive with approximately 25 BlueBird satellites in operation, though the exact timeline is uncertain.- The company plans to ramp up production to six satellites per month by the second half of 2025 and has secured launch capacity for 60 satellites between 2025 and 2026.- AST's financial health and prospect of reaching free-cash-flow positivity will depend on factors such as government contract revenue, mobile network operator agreements, and successful satellite launches and regulatory approvals.- The company currently has around $1 billion in cash, according to management, which is expected to last for 12 months and cover the construction and launch of the first 25 satellites.
- Despite AST SpaceMobile's reported losses and missing revenue targets, the company's focus remains on expanding its satellite constellation, beginning beta testing, and securing substantial revenue.
- AST SpaceMobile is actively producing larger BlueBird commercial satellites, with plans to launch 60 satellites through SpaceX, Blue Origin, and ISRO by 2026.
- The company has secured agreements with 50 mobile network operators serving nearly 3 billion subscribers across more than 20 countries, hoping to gain global coverage.
- AST SpaceMobile, currently holding around $1 billion in cash, needs to keep the cash flowing and avoid obstacles like additional capital expenditures and regulatory delays to succeed in its ambitious plan.
