AST Spacemobile Rises 181% in a Year: How to Play the Stock?

AST SpaceMobile ASTS has gained 181% in a year compared with the wireless equipment industry’s growth of 56.5%. The stock has outperformed the Zacks Computer & Technology sector and the S&P 500’s growth during this period.

It has underperformed its competitors, such as Viasat, Inc. VSAT, but outperformed Globalstar, Inc. GSAT. Globalstar has returned 157.3% while Viasat has surged 367.9% during this period.

ASTS Rides on Expanding Client Base, Technological Breakthroughs

ASTS aims to deliver worldwide cellular coverage by eradicating dead zones and providing space-based connectivity to areas that lack broadband service. Utilizing large phased array antennas, AST SpaceMobile's technology is backed by more than 3,850 patents and patent-pending claims. The company has successfully deployed its next-generation BlueBird 6 satellite in Low Earth Orbit (LEO). BlueBird 6 has the largest commercial communications array ever in LEO, covering 2,400 square feet and offering peak speeds up to 120 Mbps, with 10 times the capacity of earlier satellites. It provides full 4G and 5G services, including voice, data and video, directly to regular smartphones worldwide.

Such advancement is enabling it to expand its partnerbase worldwide. The leading telecom company, TELUS Corp., recently formed a collaboration with ASTS. TELUS will leverage ASTS’ robust space-based connectivity infrastructure to provide satellite-based cellular service across Canada. Major telecom companies such as AT&T, Verizon, Saudi Telecom Company and Rakuten also inked an agreement with ASTS. 

Many of the operators, such as Verizon and TELUS, are investing in ASTS’ portfolio expansion initiatives and accelerating innovation. The company is also benefiting from growing gateway hardware sales and U.S Government contract. It has secured a $30 million prime contract from the Space Development Agency. ASTS was also awarded the prime contract position on the U.S. Missile Defense Agency SHIELD Program.

As of Dec. 31, 2025, it had $2.33 billion in cash and cash equivalents with $2.2 billion in long-term debt. Development of sophisticated space-based infrastructure is highly capital-intensive. Availability of capital and efficient capital management are critical. As of 2025, the company's current ratio stood at 16.35, way above the industry's average of 1.47. A current ratio above one suggests that a company is well-positioned to meet its short-term obligations.

Major Challenges for ASTS

It is to be noted that most of  ASTS' current revenues come from gateway equipment and government contracts. The SpaceMobile service has not been commercially launched yet. Its business is extremely capital-intensive and requires continuous funding for hi-tech manufacturing; satellite launches and ground infrastructure development. This might necessitate additional financing and increase the risk of debt burden in the future.

It has been adversely impacted by unfavorable macroeconomic conditions, including rising inflation, higher interest rates, capital market volatility, tariff imposition and geopolitical conflicts. These have led to continued fluctuations in satellite material prices, resulting in increased capital costs and pressure on the company’s financial performance. In addition to this, high infrastructure setup costs and research and development (R&D) expenses are weighing on ASTS’ bottom line. In the December quarter, total operating expenses rose to $126.6 million from $60.6 million in the year-ago quarter.

Moreover, the direct-to-device satellite market is becoming crowded. The company faces competition from SpaceX’s Starlink, ViaSat and Globalstar. Apart from this, it competes indirectly with terrestrial wireline and wireless communications companies that invest in underdeveloped areas.

Estimate Revision Trend of ASTS

Earnings estimates for 2026 and 2027 have decreased over the past 60 days.

Key Valuation Metric of ASTS

From a valuation standpoint, ASTS is currently trading at a premium compared with the industry. AST SpaceMobile trades at a forward price-to-sales ratio of 133.41, well above the industry.

End Note

ASTS is benefiting from gateway hardware sales and U.S Government contract. The successful launch of BlueBird 6, the largest commercial communications array ever deployed in LEO, is a positive. Such technological breakthroughs and a growing userbase bode well for sustainable growth.

However, rising operating expenses and growing competition strain margin. The capital-intensive nature of the business raises risk associated with higher leverage in the future. Disruption in the supply chain of key satellite components and geopolitical volatility are other headwinds. Premium valuation is also a concern. With a Zacks Rank #3 (Hold), ASTS appears to be treading in the middle of the road, and new investors could be better off if they trade with caution. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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