Why AST SpaceMobile Stock Soared This Week
Key Points
AST SpaceMobile and SpaceX compete, but have different approaches.
The sector is getting a lift from the anticipated massive SpaceX IPO regardless.
The market could be large enough for several competitors to succeed.
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As broadband connectivity has become increasingly crucial, AST SpaceMobile (NASDAQ: ASTS) is launching satellite arrays to deliver connectivity through low-orbit satellites. That's why investors have flocked to the stock in the last year.
Shares have quadrupled in that time, but the ride has been a bit bumpier this year. Though AST stock is up 27.5% year to date, the move has come in fits and starts. This week, shares surged 17.7%, according to data provided by S&P Global Market Intelligence.
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Is SpaceX's IPO good for AST SpaceMobile?
AST isn't the only company looking to help the world get connected, though, and that's what had the stock going this week. Buzz has been increasing surrounding the upcoming SpaceX initial public offering (IPO). SpaceX filed confidentially for its IPO, according to reports, and could be targeting a valuation of over $2 trillion.
SpaceX doesn't just build and launch rockets. It also owns and operates Starlink, which employs a vast network of low Earth orbit satellites to provide high-speed internet access, with a focus on underserved and rural areas.
Both Starlink and AST SpaceMobile aim to provide broadband internet access through satellite technology, but they have different approaches. AST SpaceMobile will provide broadband connectivity directly to standard smartphones without the need for additional ground equipment or devices.
There likely will be winners and losers, but the market could be massive. For now, SpaceX is good for AST stock. It remains to be seen how far Starlink will look to expand, though, so AST shareholders should expect a bumpy ride.
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Howard Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AST SpaceMobile. The Motley Fool has a disclosure policy.
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