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AST SpaceMobile stock value underperforms in the market: over the past year, the S&P500 has risen 24%, while AST’s is down 14%. The shares, on the other hand, are plummeting. This February, the share cost was at a steady $25.37, but in the last three months alone, the worth rapidly dropped to just $6.96. For a technology company, the ups and downs are expected. Still, this comparatively poor performance does raise some concerns. But why does it happen in the first place?
A Space Venture with Enormous Risks
The primary reason AST SpaceMobile stocks are underperforming is the company’s set of financial and corporate risks. Even though all space ventures are risky, AST faces additional dangers. Licensing problems come to mind first, with AST’s experimental license for its BlueWalker3 satellite still pending. Papua New Guinea did give AST a license for operating its satellite constellation, but experts agree that this decision was somewhat premature. According to TechFreedom estimates, the orbit at 700km planned for AST use could exceed $10 billion, while Papua New Guinea’s entire governmental budget is just $6.
NASA, too, has voiced concern after AST requested FCC to take control of its upcoming 700-km altitude constellation. An existing satellite group is already working for NASA and the USGS at a similar altitude, and the agency has growing concerns as to risks of collision. Besides AST’s lack of proven experience in operating satellites, LEO is filled with space debris, which poses an additional danger of crashing into operational spacecraft.
Besides, the company’s finances seem somewhat lacking at the moment. AST SpaceMobile costs of operation have doubled in the last few months, reaching an alarming $54.3 million in capital expenditures. At this rate, the company’s cash flow is decreasing by 72.2% a year, so it needs to start making revenues fast.
However, revenues could become a problem, too, because AST SpaceMobile is not the only company working on a satellite constellation in LEO. SpaceX is actively deploying its Starlink satellites already, and OneWeb is trying to catch up, too.
Do they even know what they are doing?
One of the biggest reasons for public, government, and investor concern is AST’s inconsistent approach to business. The company started in 2017 as AST & Science. A year later, it acquired the majority shares of NanoAvionics, a trusted nano-satellite manufacturer. The acquisition was well-met initially.
However, in another year, AST unexpectedly shifted its focus to building large communication satellites — something none of the companies involved have any experience doing. Since NanoAvionics cannot contribute any expertise to building large communication satellites, it’s not clear if AST has any development strategy at all. Why acquire the company if its expertise is not required?
To be fair, AST SpaceMobile has not been switching its attention focus in the last three years. On the other hand, it did not achieve much either. The end goal is to deploy 214 LEO satellites and operate them on 16 orbital planes. The short-term plan is to launch 20 satellites covering 49 countries. At the same time, the launch of its experimental BlueWalker3 satellite has already been delayed several times.
First, BW3 was supposed to become a rideshare payload on the Soyuz rocket. Later, AST switched to SpaceX’s Falcon 9. The launch should have happened by the end of this year but has once again been delayed for several months, if not more. So, the question on everyone’s mind is — how can AST hope to deploy 20 satellites in just a year if it hasn’t been able to launch just one in three?
Conclusion
Even though miracles do happen, and many projects saw the light of day with even lesser success odds, it is unlikely that AST SpaceMobile stock value will rise any time soon. Besides, one cannot but wonder — how can the company achieve its goals if it switches between ideas so fast? Unpredictable as the space market can be, business growth is about dedication and keeping a tight focus on its end goals. When the goals change on a daily basis, the public starts executing doubts about the company’s real potential — and with a good reason.
