AST SpaceMobile Has $3.7 Billion in Liquidity and No Commercial Revenue. Here's How to Value That.

Source The Motley Fool

Key Points

  • AST generates all of its revenue from defense contracts and commercial prepayments rather than continuous commercial contracts.

  • That could change next year when its constellation grows to 45 satellites.

  • 10 stocks we like better than AST SpaceMobile ›

AST SpaceMobile (NASDAQ: ASTS) is a tough stock to value. The developer of low Earth orbit (LEO) satellites has a market cap of $15.3 billion, which is 90.5 times its expected 2026 revenue. It had more than $3.7 billion in total liquidity at the end of June, but it doesn't generate any revenue from its commercial contracts.

So how should investors value AST SpaceMobile?

AST SpaceMobile's BlueBird satellites provide broadband cellular connections for government and commercial customers. It's successfully launched 13 of those satellites so far.

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Satellites in orbit around the Earth.

Image source: Getty Images.

AST SpaceMobile currently generates all of its revenue from government and defense contracts, as well as prepayments from AT&T, Verizon, and other telecom companies, rather than from its commercial satellite operations.

But next year, AST plans to expand its constellation to 45 satellites, enabling it to provide continuous direct-to-cell broadband coverage for its telecom customers. It's already working with over 60 carriers to reach more than 3 billion wireless subscribers, and it plans to eventually expand its constellation to more than 248 satellites to convert its backlog -- which reached $1.3 billion in its latest quarter -- into actual revenue.

If AST achieves those goals, analysts expect its revenue to surge more than tenfold from $169 million in 2026 to $1.73 billion in 2028. So, rather than valuing AST based on its near-term revenue, investors should value it for the future growth of its satellite constellation.

Should you buy stock in AST SpaceMobile right now?

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Leo Sun 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.

Disclaimer: For information purposes only. Past performance is not indicative of future results.
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