With few exceptions, the reality of modern life means that we are connected 24/7/365 and increasingly we are connected to both the physical and digital worlds using our mobile devices. No matter where in the world people find themselves, being connected to the internet is no longer a luxury but a necessity to navigate society. Unfortunately, reliable internet service is not always a given, but there is a company looking to change that by utilizing outer space to build and deploy a broadband network to eliminate coverage gaps.
AST SpaceMobile, Inc. (NASDAQ: ASTS) is building a space-based cellular network using satellites to provide connectivity to people and places that have been traditionally underserved by traditional broadband networks. The $1.5 billion market cap company is headquartered in Midland, Texas, and came public in the fourth quarter of 2019.
You would probably expect a small-cap emerging technology company to be a wildly unprofitable cash-burning machine with a sky-high beta, but that is not the case with ASTS. AST SpaceMobile has a beta of under 0.3 and generated revenue of $12.4 million in 2021. On the profit side, AST saw a gross profit of $4.8 million and a net loss of $19 million. The company is currently trading around the $8 per share level and has cash on hand of about $7 per share which gives investors a margin of safety.
The company received some good news related to its BlueWalker satellite technology in early May when it was granted an experimental license by the Federal Communications Commission to conduct U.S.-based testing of the BlueWalker 3 satellite. This particular satellite uses low-band cellular frequencies to provide space to ground broadband coverage. AST SpaceMobile is planning to test the satellite during the summer of 2022 from Cape Canaveral, Florida. To launch the satellites into orbit, AST has entered into a multi-launch partnership with Elon Musk’s SpaceX.
The company is also partnering with cellular service providers around the world to deploy its broadband capability once the network is operational. It has partnerships with Globe Telecom in the Philippines, and Orange S.A. in Africa so far. The most recent funding round saw AST SpaceMobile pick up investments from companies such as Vodafone in the United Kingdom and Rakuten in Japan which demonstrates that the companies at the forefront of mobile service and commerce are interested in seeing a space to ground broadband network succeed.
According to the company, the space-based network will be compatible with 2G, 3G, 4G, and 5G networks which will enable users to utilize reliable cellular service in remote areas, out at sea, and while onboard airplanes. Being without mobile internet service is rapidly becoming not so much an inconvenient first-world problem but instead a non-starter for surviving and thriving in the modern world. AST SpaceMobile has grand plans to make sure nobody with a mobile phone is without internet service no matter where on the planet they find themselves. At current price levels, investors have a chance to buy into an emerging technology that while certainly speculative, has wonderous prospects.
Disclosure: No position. Spotlight Growth has no relationships with any of the companies mentioned in this article and did not receive payment in any form for its creation. This is an opinion article and is not meant to be financial advise. We are not broker-dealers or investment professionals. Please conduct your own due diligence. For more information on our disclosures, please visit: https://spotlightgrowth.com/disclosures/
