Why AST SpaceMobile Stock Zoomed Higher This Week

Shares of AST SpaceMobile (NASDAQ: ASTS) popped again this week, according to data from S&P Global Market Intelligence. The company is a start-up working to build a satellite constellation that can beam internet connectivity directly to smartphones, and it just won validation from the U.S. government to bid on contracts for the Golden Dome security system. The stock is up 18.6% this week as of this writing at 12:41 PM EST on Friday, Jan. 16, and is up over 400% in the past year.

Here's why AST SpaceMobile stock was rising again this week, and whether you should buy shares today.

New validations, upcoming constellation launch

Utilizing giant satellites, AST SpaceMobile is building a satellite internet service that can beam internet to smartphones without a satellite terminal. This will directly compete with Starlink once launched, and could prove disruptive because of the friction reduction of not needing a satellite dish to capture the signal.

Throughout 2026, AST SpaceMobile will launch its satellites into orbit, with plans to turn on internet service in the United States sometime this year. Now, it is getting potential validation for winning U.S. government contracts such as the Golden Dome. This week, AST SpaceMobile was authorized to bid for contracts for the SHIELD missile defense program. This could open up billions of dollars in spending from the U.S. military related to the Golden Dome project using this direct-to-device technology.

Today, AST SpaceMobile generates little revenue, posting $15 million in sales last quarter. To build and launch its satellite constellation, the company is burning through close to $1 billion in free cash flow at the moment. It will need to grow revenue quickly in order to turn a profit.

Image source: Getty Images.

Should you buy AST SpaceMobile stock?

After this massive run, AST SpaceMobile stock trades at a market cap of over $40 billion. That is a massive premium to its trailing revenue, giving it a sky-high price-to-sales ratio (P/S).

Once the satellite constellation is ready, AST SpaceMobile may gain hundreds of millions in sales from telecommunication partnerships, as well as the potential for lucrative government contracts. This would still make the stock overvalued, and it is unclear how large the business will need to be to get a return on all this upfront satellite development.

AST SpaceMobile stock is wildly overvalued right now. Do not buy this stock today.

Brett Schafer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.