AST SpaceMobile stock is down big this year, as the risk SpaceX poses has been weighing on its valuation.
The stock is still trading at a significant premium with respect to revenue.
The company has some exciting growth opportunities, but it's also unprofitable and faces plenty of uncertainty ahead.
It's been a disastrous year for AST SpaceMobile (NASDAQ:ASTS). The space stock has plummeted more than 50% in just the past six months. It's hit a fresh 52-week low this week as investors have soured on this once-popular growth stock.
The company is building a space-based cell network, but competition from Space Exploration Technologies Corp, also known as SpaceX, may have investors worried about its ability to compete in the long run.
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Is the market overreacting to this risk, and could buying AST SpaceMobile stock while it’s low right now set investors up for massive returns later on?
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SpaceX's business is broad and disruptive, raising fears for investors of many types of companies, including AST SpaceMobile. The space company is small compared to SpaceX. However, it has already begun generating some significant revenue while also locking in agreements with 60 mobile network operators. Its revenue through the first six months of the year has totaled $46.3 million, up from just $1.9 million during the same period a year ago.
The problem with AST's stock is that it's already experienced such a large run-up in value before the start of this year. In 2025, it rose 244%, and even with its downfall this year, its five-year gains are still up around 340%.
It has a market cap of over $18 billion, despite only generating $115 million in revenue over the past four quarters. The sell-off this year may simply be the stock getting back down to reality. Even now, it still doesn't look cheap, as it's trading at around 150 times its trailing revenue, which is a steep premium by any standard.
AST SpaceMobile is growing fast, but the business is still fairly small in terms of revenue. Its valuation has been crashing, and if the stock were simply to get back to its 52-week high of $133.86, it would more than double from where it's trading today.
Unfortunately, it may not get back to those levels anytime soon. Competition, cash burn, and a lack of profitability are key reasons why investors may be having second thoughts about the business these days.
As a long-term investment, it may be worth hanging on to AST SpaceMobile, but this is only going to be a suitable option for patient investors who can stand the volatility that will inevitably come with it.
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David Jagielski, CPA 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.