AST SpaceMobile Stock Is Down 50% From Highs, and Just Raised $1 Billion to Shore Up Its Satellite Internet Plans. Here's Why I Am Still Not Buying Shares.

The initial public offering (IPO) of Space Exploration Technologies (NASDAQ: SPCX) may have marked a near-term peak in space-economy stocks. Many companies in the sector have fallen precipitously over the last month, including huge 2025 winner AST SpaceMobile (NASDAQ: ASTS).

Now, the direct-to-device satellite internet business aiming to revolutionize connectivity is raising $1 billion through a convertible bond offering, sending shares down nearly 60% from highs. However, at a share price of around $55 today, I still would not add AST SpaceMobile to my portfolio. Here's why.

Massive opportunity in satellite internet

AST SpaceMobile has the audacious goal of being the first company to fully commercialize high-speed satellite internet beamed directly to smartphones. This means that, unlike with current satellite internet services like Starlink, a person will not need a bulky satellite dish to obtain an internet connection to their devices. Starlink already generates over $10 billion in revenue, so if a company can improve on the service, you could see an explosion in adoption that disrupts the entire wireless internet sector.

Investors initially balked at this idea, as it had never been done before. However, over the last few years, AST SpaceMobile has proven that its technology can work with its massive BlueBird satellites. Seeing the technology getting proven, along with the hype around the incoming SpaceX IPO over the last year, sent AST SpaceMobile stock from $3 in 2024 to a peak of over $100 a share in 2026.

Now, the air has begun to come out of the space economy investing theme, with AST SpaceMobile stock down to around $55 as of this writing.

Image source: Getty Images.

Major competition and operational risks

In the last few years, AST SpaceMobile has begun launching its satellites into orbit, partnering with Blue Origin and its potential competitor, SpaceX. It has nine operational satellites in orbit, including three launched by SpaceX. Manufacturing facilities in Texas are producing the remaining 90 or more satellites to create a full constellation in low Earth orbit, which AST SpaceMobile hopes will be launched in a timely manner.

This manufacturing ramp has already led to significant cash burn for AST SpaceMobile, with free cash flow of negative $1.37 billion over the last 12 months. Getting all its satellites to orbit will be expensive, which is why AST SpaceMobile just raised another $1 billion in a convertible bond offering. Plus, there is no guarantee launches will go as planned, with a recent Blue Origin mission misplacing an AST SpaceMobile satellite in orbit. Blue Origin's launchpad recently blew up, too, which will decrease the supply of payload capacity to send objects to orbit in a time when there is massive demand in the satellite industry.

On top of these launch risks, AST SpaceMobile will face competition from SpaceX in the direct-to-device internet market. According to SpaceX and Elon Musk, Starlink is working to deliver direct mobile connectivity to global users in the years ahead, capabilities that could match those AST SpaceMobile can provide customers. This could be a major issue for AST SpaceMobile, since SpaceX is one of its launch partners for BlueBird satellites.

Why AST SpaceMobile stock is one to avoid

Even if you believe AST SpaceMobile can defeat the mighty SpaceX and the tens of billions it raised in its IPO (along with its vertically integrated launch capabilities), the stock still looks overvalued today.

With a market value of $21 billion, huge cash burn, and a lot of debt beginning to pile up on the liabilities side of the balance sheet, AST SpaceMobile will have an enterprise value of $25 billion or more in the years ahead, based on the current share price, especially if you factor in continuing shareholder dilution.

Over the last 12 months, the company has generated less than $100 million in revenue. A full-scale direct-to-device satellite internet business may be able to generate $1 billion in revenue in the near future, but that would still make the stock overvalued relative to its current share price.

With likely a decade's worth of growth priced into shares today, even if its business strategy is successful, investors should avoid buying the dip on AST SpaceMobile stock.

Brett Schafer 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.