AST SpaceMobile Locks In Next Launch For Its Mega Satellites

Space start-up AST SpaceMobile (NASDAQ:ASTS) has announced Aug. 5 as the date of its next launch and satellite deployment. The announcement comes just days after Elon Musk’s rival satellite company Space Exploration Technologies Corp. (NASDAQ:SPCX), or SpaceX, deployed new satellites of its own.

It’s the latest move in a new “space race”: the race to build a low-earth-orbit satellite network for broadband and cellular access. Right now, SpaceX’s Starlink has a big lead, which is why the upcoming launch is key to AST SpaceMobile’s business... and its stock price.

Here’s why Aug. 5 could make or break AST SpaceMobile.

Image source: The Motley Fool.

A new frontier

Satellite communication is nothing new. The first “passive relay” communications satellite broadcast a Christmas message from President Eisenhower for 35 days after its launch on Dec. 18, 1958. Telstar, the first active communications satellite, was launched by AT&T (NYSE:T) in 1962 and enabled the first transatlantic television broadcast.

Since then, communications satellites have been transmitting TV broadcasts, phone and video calls, and internet access around the world. Satellite communications are especially important for people living in rural or remote locations that aren't served by traditional cable networks or cellular towers.

SpaceX’s Starlink service is currently the undisputed leader in providing satellite broadband and cellular service. It boasts 10.3 million subscribers across 164 countries, and a fleet of more than 9,600 satellites. Meanwhile, AST SpaceMobile currently has 9 satellites in orbit (yes, you read that right: nine).

So, why are we even talking about this company?

Image source: Getty Images.

A different model

Comparing AST SpaceMobile to SpaceX is a little bit like comparing apples and oranges. But three big differences matter most for investors.

First, unlike Starlink, which directly provides broadband service to paying subscribers, AST SpaceMobile sells its services to mobile network operators like AT&T and Verizon Communications (NYSE:VZ). The carriers offer satellite coverage as an add-on to their subscribers, and typically split the revenue 50/50 with AST SpaceMobile. So, they’re more of a “range extender,” allowing carriers to extend their coverage into rural areas rather than providing full global coverage.

Second, AST SpaceMobile’s BlueBird satellites are much larger than Starlink’s. They use a unique design that allows them to “unfold” their 693-square-foot arrays (about the size of two school buses) in space, making them the largest commercial arrays ever deployed in low Earth orbit. Because of BlueBird’s larger size, the company believes it only needs to deploy 45 to 60 satellites to offer continuous coverage in high-priority markets. The Aug. 5 launch would deploy three BlueBird satellites (11, 12, and 13).

Third, AST SpaceMobile is a pure-play satellite operator, as opposed to a service provider, an AI company, and a launch company. That worked against the company in April, when Blue Origin -- the launch provider for BlueBird 7 -- deployed the satellite into an orbit too low, resulting in its loss. So AST SpaceMobile used SpaceX’s Falcon 9 to successfully launch BlueBird 8, 9, and 10 on June 17, and will use it again for the planned Aug. 5 launch.

Why the launch matters

AST SpaceMobile hoped to have those 45-60 BlueBird satellites in orbit by the end of 2026. That seems like an unattainable timeline. Even if it successfully launches a set of three satellites every month for the rest of the year, it would have only 24 total in orbit. Over the next few years, the company hopes to increase that to 248 satellites, so it has a lot of catching up to do.

SpaceX’s recent Starship launch successfully deployed 20 Starlink satellites into low Earth orbit, thanks to the rocket’s massive payload capacity. If Starship becomes commercially viable, it could ferry more BlueBird satellites into orbit at a time, but it’s unclear when – or if – Starship will begin commercial operations.

With AST SpaceMobile’s shares down 56.4% from their highs, the company needs to put its plans into action without further delays. The Aug. 5 launch will either be a big step forward or a big step back for the company and its long-term ambitions.

John Bromels has positions in Verizon Communications. The Motley Fool has positions in and recommends AST SpaceMobile. The Motley Fool recommends Verizon Communications. The Motley Fool has a disclosure policy.