AST SpaceMobile Trims Debt: Financial Flexibility to Aid the Stock?

AST SpaceMobile, Inc. ASTS has retired $225 million aggregate principal amount of the 2032 convertible notes to reduce its debt burden and cash interest obligations. This represents approximately half of the 2032 convertible notes, with an aggregate principal amount of about $235 million remaining outstanding. In addition to strengthening the balance sheet, the strategic move has enabled the company to free up cash for research and development activities to fuel its growth engine. 

AST SpaceMobile 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, AST SpaceMobile has to continuously customize its network offerings, enhance the cost-effectiveness of its products and services and boost its satellite data networks to remain ahead of the competition. By significantly reducing its outstanding debt, AST SpaceMobile has enhanced its financial flexibility to focus more on its core operations.   

Owing to high infrastructure set-up costs and research and development expenses for a highly sophisticated technology for developing satellites, AST SpaceMobile envisions significant expenditures in the upcoming months for building and launching the next crop of satellites in tune with its expansion plans to serve the full spectrum of U.S. subscribers. The company largely depends on carrier investments and institutional financing to fuel its expansion plans. In such a scenario, the enhanced financial flexibility is likely to prove beneficial for the company.

Other Tech Firms Plagued by High Debt

Viasat, Inc. VSAT has a high debt burden. As of March 31, 2025, it had a net debt of $5.6 billion. Viasat has an extensive global operation. Around 29% of its total revenues came from international sales in fiscal 2024. This makes the company vulnerable to risks associated with geopolitical and macroeconomic uncertainties in the international markets. Moreover, changes in regulatory policies in its operating countries severely affect its financial results. Foreign exchange fluctuations also adversely impact Viasat’s earnings and cash flow.

CommScope Holding Company, Inc. COMM had $7.24 billion in long-term debt as of March 31, 2025. CommScope is facing challenges due to lower spending from cable operators and wireless carriers owing to a challenging macroeconomic environment and high inflationary pressures. Volatility in prices of raw materials and components is hurting the company’s profitability. The growing tension between the United States and China relating to trade restrictions imposed on the sale of communication equipment to Chinese firms has further led to a loss of business for CommScope.

ASTS’ Price Performance, Valuation and Estimates

AST SpaceMobile has gained 336.4% over the past year compared with the industry’s growth of 38.6%

From a valuation standpoint, AST SpaceMobile trades at a forward price-to-sales ratio of 78.38, well above the industry.

The Zacks Consensus Estimate for AST SpaceMobile’s earnings for 2025 has moved south over the past 60 days.

AST SpaceMobile currently carries a Zacks Rank #3 (Hold). 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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