Why Firefly Aerospace Stock Went to the Moon Today
Key Points
AST SpaceMobile wants to build its own rocketship to launch its satellites.
AST will buy 36 rocket engines from Firefly, then license the right to build even more.
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Firefly Aerospace (NASDAQ:FLY) stock is living up to its name this morning. Shares of the rocket stock flew higher after announcing a groundbreaking deal to sell rocket engines to AST SpaceMobile (NASDAQ:ASTS) -- and collect $1.3 billion in the process.
AST investors seem to like the news, and that stock is up 5% -- but Firefly investors are absolutely over the moon, and the stock is up 26.8% through 11:30 a.m. ET.
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Firefly + AST SpaceMobile: Better together?
How did this deal come together? Begin with AST SpaceMobile, which is attempting to build a constellation of direct-to-cell communication satellites that will enable ordinary cellphones to call each other all around the world, via satellite, no cell tower required. It's an ambitious idea that just might work if AST can get its satellites in orbit.
But that's precisely the problem.
Ariane, Blue Origin, and United Launch Alliance -- three of the biggest space launchers on the planet -- are all currently grounded over various "anomalies," leaving AST reliant on SpaceX Falcon 9 rockets (which SpaceX wants to retire) as AST's sole path to orbit. AST's solution to this problem is to build its own rocket, and it's reached out to Firefly to provide the engines for it.
What's next for Firefly Aerospace
Firefly's more than happy to help, of course, and plans to sell AST SpaceMobile 36 rocket engines -- enough to equip three rockets -- for $1.3 billion. Then Firefly will grant AST a license to build additional engines on its own, presumably generating even more revenue in the form of license fees.
Granted, a lot of this (especially the last part) is contingent on AST succeeding in designing and building its own rocket. But the first $1.3 billion, at least? For Firefly, that looks like it's in the bag!
Should you buy stock in Firefly Aerospace right now?
Before you buy stock in Firefly Aerospace, consider this:
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AST SpaceMobile, Firefly Aerospace, and Space Exploration Technologies. The Motley Fool has a disclosure policy.
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