Why AST SpaceMobile Stock Is Sinking Today

Key Points

• AST SpaceMobile opened Tuesday's trading with big sell-offs, but it has seen a significant recovery as the day has progressed.

• The satellite communications company's share price fell in response to Lockheed's Q2 report and analyst coverage on BlackSky Technology.

• AST's share price has bounced back from early sell-offs following news about the U.S.'s "Golden Dome" missile defense system.

• 10 stocks we like better than AST SpaceMobile ›

AST SpaceMobile (NASDAQ: ASTS) stock is losing ground in Tuesday's trading, although it has also seen a big recovery from its low in the session. The company's share price was down 1.9% as of 2 p.m. ET but had been down as much as 9.6% earlier in the day.

The broader market saw strong bearish momentum early in today's session, with sell-offs concentrated in the tech sector, but the pullback has moderated as the day has progressed. In addition to valuation pressures impacting growth-dependent tech stocks, AST stock appears to have been negatively impacted by Lockheed Martin's disappointing earnings report and analyst coverage on fellow space industry player BlackSky Technology.

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Lockheed's Q2 results are weighing on AST stock

Lockheed Martin published its second-quarter results before the market opened this morning, and the market has had a strong bearish reaction to the numbers. While the aerospace and defense giant's non-GAAP (adjusted) earnings per share of $7.29 beat the average analyst estimate by $0.82 per share, sales of $18.16 billion in the period missed Wall Street's forecast by $380 million. Gains for the company's space segment helped push overall sales up 0.2% year over year, but the results weren't as strong as anticipated -- and that appears to have had spillover effects for AST's valuation.

What's next for AST?

In addition to Lockheed's Q2 results, new coverage on BlackSky Technology also seems to be playing a role in valuation stumbles for otherwise high-flying space stocks. Clear Street lowered its rating on the stock from buy to hold this morning, and Canaccord lowered its one-year price target from $28 per share to $27 per share despite keeping a buy rating on the stock. The coverage appears to have raised concerns about valuations across the broader space industry, but some emerging news late in the day helped drive some valuation recovery for AST.

According to a report from Reuters today, the Trump administration is ramping up efforts to find partners for the country's "Golden Dome" missile-defense system other than CEO Elon Musk's SpaceX. AST is already rumored to be a tech partner for the Golden Dome project, and it's possible that forthcoming news about the defense initiative could spur substantial gains for the stock.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool recommends Lockheed Martin. The Motley Fool has a disclosure policy.