Why AST SpaceMobile Stock Jumped 53% in January

Shares of AST SpaceMobile (NASDAQ: ASTS) were among the winners last month as the satellite stock benefited from bullish sentiment toward the sector to start the new year, and news that it was awarded a SHIELD contract from the Missile Defense Agency.

The bullish momentum was enough to overcome a new competitive threat from Jeff Bezos's Blue Origin, and the company also announced a launch date for its new BlueBird 7 satellite.

According to data from S&P Global Market Intelligence, the stock finished January up 53%. As you can see, it was nonetheless a volatile month for AST.

ASTS data by YCharts

AST signs a big contract

The biggest news in the month for the satellite stock, which specializes in broadband service, was awarded a contract from the U.S. Missile Defense Agency's Scalable Homeland Innovative Enterprise Layered Defense initiative, better known as SHIELD.

According to the press release, "The contract encompasses a broad range of work areas that allows for the rapid delivery of innovative capabilities to the warfighter with increased speed and agility." It also shows AST tapping into a new revenue stream from the defense sector, which could become significant as the company grows. The stock rose 14.5% on Jan. 16 after the news came out.

The other major news out on AST was the announcement that its BlueBird 7 launch is scheduled for late February, and it's tracking for 45-60 satellites in orbit by the end of the year. The BlueBird 7 is identical to the BlueBird 6.

Finally, the stock pulled back briefly on Jan. 21 on news that Blue Origin was launching its own competing satellite, which it said was designed to deliver symmetrical data speeds of up to 6 Tbps anywhere on Earth.

Image source: Getty Images.

What's next for AST SpaceMobile

AST's market cap is now hovering around $40 billion, though the company is only just starting to generate meaningful revenue, making it a high-risk stock.

AST's SpaceMobile's fourth-quarter earnings aren't due out for another month, but analysts see revenue rising to $39.5 million as the commercialization of its satellites begins.

Still, it seems fair to question how much higher the stock can go as the broadband and telecom industry typically trades at low valuations, and many of the mature operators have market caps that are not much higher than AST. The company may have to eventually prove it can expand its addressable market beyond broadband service in order for the stock to move significantly higher.

Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.