Down 41% From Its 52-Week High, Is It Time to Buy the Dip on AST SpaceMobile?

The space industry has undergone a remarkable transformation over the past few decades, shifting from government-led projects to being increasingly dominated by private-sector players. Space exploration is entering a new era, with companies like SpaceX and Rocket Lab USA leading the charge.

AST SpaceMobile (NASDAQ: ASTS) is one intriguing company making headway in this industry. This satellite designer and manufacturer is establishing a groundbreaking space-based cellular broadband network and has hit some significant milestones in 2024. The company inked deals with telecommunications giants AT&T and Verizon Communications, and the stock has surged 281% since the start of the year.

AST SpaceMobile stock has cooled down in recent months and is 41% below its 52-week high price of almost $39 per share in August. The recent dip may be a good buying opportunity for investors, but there are a few things you should know first.

Connect anywhere with AST SpaceMobile

In a world driven by technology, reliable connectivity is essential, yet millions still lack access to internet services. Here's where AST SpaceMobile operates, revolutionizing global communication with its innovative space-based connectivity solutions.

AST SpaceMobile aims to launch commercial satellites into low-Earth orbit and deliver reliable cellular broadband service that is accessible via standard mobile phones. Its satellite network aims to bridge the connectivity gap in regions where traditional infrastructure is too costly or logistically challenging to implement.

Beyond that, connectivity is the backbone of innovative technologies such as autonomous vehicles and Internet of Things devices, which need reliable networks to communicate and operate effectively.

As we push the boundaries of exploration with robots and landers venturing to the Moon, Mars, and beyond, robust communication networks will be critical for their operations, and space-based connectivity supports this journey.

AST fortified major partnerships earlier this year

AST SpaceMobile has partnered with telecom giants AT&T and Verizon to expand its space-based network. On May 15, it solidified its long-standing relationship with AT&T by entering a new commercial agreement that extends their collaboration through 2030.

Two weeks later, AST SpaceMobile expanded its reach with Verizon, which pledged a substantial $100 million investment to the space communications company. The deal includes $65 million in commercial pre-payments, with $45 million contingent on specific conditions and $35 million in convertible notes, underscoring Verizon's and AST SpaceMobile's shared mission.

Launch of the BlueBird satellites met a huge milestone

Earlier this year, AST SpaceMobile had just one satellite orbiting the Earth. Fast-forward to September, and AST celebrated an important milestone by successfully launching five new satellites, named BlueBirds, into low-Earth orbit.

Image source: Getty Images.

BlueBird communication antennas reach 693 square feet when fully extended, making them the largest ever deployed by a commercial spacecraft. As CEO Abel Avellan said, this achievement represents a "momentous occasion" for the company.

But the journey doesn't stop here. AST SpaceMobile has ambitious plans to launch an additional 17 satellites by the first quarter of next year. In the long term, the company envisions building and launching 155 satellites by 2030.

Is it a buy today?

Investing in an emerging company like AST SpaceMobile comes with challenges, particularly due to the uncertainty surrounding its revenue stream. The business has not generated income from its flagship SpaceMobile service; previous revenue was derived from its former subsidiary, NanoAvionics, a small satellite bus manufacturer that it sold in 2022.

However, there's a silver lining: AST SpaceMobile is making strides toward commercial viability and has significant upside potential as the industry expands. Analysts at Deutsche Bank forecast revenue could reach $50 million by next year, grow to $1.4 billion by 2027, and soar to $5.1 billion by 2030. Furthermore, they anticipate the company will become cash-flow positive by 2027.

That said, AST SpaceMobile stock is vulnerable to volatility as it looks to grow in the emerging satellite communications market. Ramping up commercial operations and launching more satellites will take time and capital, which could mean more debt or shareholder dilution.

For patient, long-term investors with a high tolerance for risk, the recent dip is an opportunity to build a small position in the space company -- as long as you're aware of the dilution risk and volatile road ahead before putting your capital into this exciting but risky stock.

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Courtney Carlsen has no position in any of the stocks mentioned. The Motley Fool recommends Rocket Lab USA and Verizon Communications. The Motley Fool has a disclosure policy.