AST Mobile Space (NASDAQ:AST) the stock has a lot of potential and an incredible long-term growth path despite the high investment risk.
The company’s mission is to make every cell phone a satellite phone. Its ambitious plan is to deploy satellites to provide high-speed cellular coverage from virtually anywhere on the map.
ASTS plans to disrupt the telecommunications industry with its technology and transform the wireless broadband industry.
AST SpaceMobile completes merger with shell company New Providence back in April. The ASTS had plans to merge with SPAC New Providence last year. However, since then ASTS stock has moved slowly, trading near its opening price of $ 11.39.
With no satellites in orbit at the moment and increasing competition in the industry, there are obvious risks to investing in ASTS stocks.
However, to quote UK mega-bank Barclays, “if the technology works as intended and management does, we see a compelling investment opportunity.”
Serve the underserved
The global pandemic has transformed internet connectivity into an essential utility. With the introduction of social distancing measures, the need for robust cellular connectivity that supports cutting-edge technologies has become imperative. It is achievable for the developed world, but it is not for the majority of the planet.
ASTS plans to deploy its initial fleet of 170 low orbit satellites to cover 51% of the world’s population without mobile broadband. The BlueWalker 3 satellite can communicate directly with mobile phones using standard 3GPP frequencies, an industry standard for 5G.
Another positive point for ASTS has been its ability to partner with some of the best companies in its industry. American Tower (NYSE:AMT), an independent tour operator with operations in the United States and 22 other markets, is one of them.
AMT basically builds towers which are used by mobile network operators (MNOs) to provide cellular services. The company has built its towers in a variety of places, which can be quite difficult.
AMT’s rationale behind investing in ASTS is that ASTS’s business could essentially become an extension of its own. In addition, MNOs would then become a common clientele.
In addition, in December 2020, ASTS announced a partnership with the telecoms giant Vodafone (NASDAQ:VOD).
The companies will launch the initial phase of the commercial space mobile communications service in 2023. The first phase involves the use of 20 satellites that will provide low latency connectivity to approximately 1.6 billion people.
AMT CTO Ed Knapp believes ASTS is above the competition when it comes to direct broadband wireless connections.
Once the network is fully operational, it will help bring robust internet connectivity to over 50% of the world’s population. In addition, its revenue-sharing model with MNOs and having AMT as an infrastructure partner are major assets.
By supporting the first phase of the commercial launch of its network, it obtained funding of $ 462 million. The funds are sufficient for its operating and capital expenditure needs of $ 25.1 million and $ 54.3 million, respectively.
Approximately $ 51.7 million has been invested in the development of the BW3, with an additional $ 14-16 million will be committed for components and launch.
Final word on ASTS actions
The ASTS share has not been able to gain momentum since its IPO in April. However, with the multiple growth catalysts to come and recent positive developments, the stock will start to build a decent head of steam.
According to some analysts, it is trading at a discount of more than 170% from its target average price. Of course, these estimates are on a long-term basis when the business can meet most of its goals.
With the ability to exploit a trillion dollar market opportunity and its competitive advantages over its peers, ASTS stock is a great long-term game in the fast growing space industry.
As of the publication date, Muslim Farooque does not have (directly or indirectly) any position on any of the titles mentioned in this article. The opinions expressed in this article are those of the author, subject to the InvestorPlace.com publishing guidelines.
Muslim Farooque is a passionate investor and an optimist at heart. A long-time player and passionate about technology, he has a particular affinity for analyzing technology stocks. Muslim holds a Bachelor of Science in Applied Accounting from Oxford Brookes University.