Why AST SpaceMobile Stock Popped Again Today

AST SpaceMobile (NASDAQ: ASTS) stock shot up 14.5% through 10 a.m. ET Thursday after the satellite communications stock announced it has signed a "definitive commercial agreement" with existing partner Verizon (NYSE: VZ) to "provide space-based direct-to-device connectivity to everyday cellphones" across the United States.

The agreement is set to go into effect in 2026.

Image source: Getty Images.

Better together?

With "the largest-ever commercial communications arrays deployed in low Earth orbit," AST SpaceMobile says it "can connect directly to everyday smartphones, eliminating the need for specialized equipment."

AST is the company that first popularized this concept, and then demonstrated it, to the extent it's now entered into the vernacular as direct-to-cell satellite communications, or DTC -- though AST has not yet begun commercial service. Verizon seems confident that commercial service will come eventually, however, as AST continues launching satellites to orbit and building out its constellation.

The telecom giant says, "This partnership with AST SpaceMobile is a good step forward ... integrating our expansive, reliable, robust terrestrial network with this innovative space-based technology."

Is AST stock a buy?

So you can see why investors are excited today.

Granted, cash burn remains a concern for AST SpaceMobile. The company is burning more than $675 million in cash annually right now, and at this rate, its $924 million in cash in the bank could be gone in as little as 16 months. The good news for AST shareholders is that with the stock continuing to hit new highs, AST's market valuation is now approaching $30 billion, enabling it to raise new capital by selling shares.

While AST has insisted it won't need to do this, the option does seem to be there now, if AST changes its mind.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends Verizon Communications. The Motley Fool has a disclosure policy.