AST SpaceMobile May Consider a Major Stock Sale as a Strategic Move

Prediction: AST SpaceMobile’s Strategic Move Could Be to Sell a Substantial Amount of Stock

AST SpaceMobile (NASDAQ: ASTS), a company specializing in direct-to-cell (DTC) satellite communications, has experienced significant fluctuations since its initial public offering (IPO). Starting at an IPO price near $10 in 2021, the stock fell to around $2 earlier this year. However, with strong backing from major telecom companies like AT&T (NYSE: T) and Verizon (NYSE: VZ), AST's stock surged dramatically in 2024, rising from $2.21 in April to over $29 recently.

AST SpaceMobile has advanced from operating a single experimental BlueWalker communications satellite to preparing for the launch of five fully functional satellites by September. The company has received Federal Communications Commission (FCC) approval for these satellites and aims to begin beta service by the end of the year.

Given this impressive stock price increase, it may be strategically wise for AST SpaceMobile to consider selling a substantial amount of stock to capitalize on its gains and secure its future.

From Initial Skepticism to Achieving Milestones

When AST SpaceMobile first announced its IPO in 2021, many were skeptical. The company claimed it would revolutionize satellite communications by creating "the first and only space-based cellular broadband network accessible directly by standard mobile phones." Despite promising to tap into a $1 trillion global mobile wireless market, AST’s proprietary technology details remained undisclosed, raising doubts about its feasibility.

Nonetheless, AST achieved a milestone by successfully placing the first DTC phone call using a BlueWalker satellite. Subsequent contracts with major telecom providers like AT&T and Verizon, worth over $100 million each, solidified AST’s position in the market. Current estimates value AST’s implied market capitalization at $8 billion, with $285 million in cash on hand, exceeding its debt.

The Need for Capital

AST’s recent filings indicate that the cost of assembling, integrating, testing, and launching its first five Block 1 BlueBird (BB) satellites is approximately $115 million. To build, launch, and operate the next 20 Block 2 BB satellites, the company estimates a requirement of between $350 million and $400 million.

To fully realize its satellite constellation plans, AST projects needing around $3 billion in total funding. The current cash reserves and contracts are insufficient to cover these expenses. Therefore, issuing new shares could be a viable option to raise necessary funds.

Strategic Stock Sale

Issuing new stock could address AST’s funding needs effectively. For example, selling 55 million shares could generate the $1.6 billion required for the initial 100 satellites. Alternatively, selling 100 million shares (64% of shares outstanding but only 36% of implied shares outstanding) could cover the entire $3 billion needed for the complete satellite network.

While AST could opt to sell shares gradually, this approach carries the risk of lower future share prices and potential dilution. A one-time substantial stock sale might mitigate these risks, allowing the company to focus on business development and operational scaling.