Has AST SpaceMobile reached bubble territory, or is there further upside?

AST SpaceMobile (Nasdaq: ASTS) has had a great year. It is up 500% this year and over 820% in the last year.

Today alone, the stock is up 17%, fueling a retail frenzy as traders flock to the stock to get a share of the upside.

The stock seems to be on course for further upside, as many on social media speculate about a short squeeze that can further drive the stock up. But is it a sane decision to enter at this point?

Let’s take a look at what the company is doing to see if it’s a worthwhile endeavour backing it at current levels.

AT&T and Verizon deals

May was an eventful month for the company. On the 15th of May, it announced a deal with AT&T for the provision of satellite internet connectivity to phones.

According to the deal, the company is supposed to provide space-based network connectivity until 2030. This deal was a result of several years of collaboration with the telecom giant.

AT&T has already run a commercial with Hollywood star Ben Stiller and golf icon Jordan Spieth, promoting the benefits of ASTS’ technology. This has further fueled the star power of the stock among retail traders.

Two weeks after this deal, the company announced another collaboration with AT&T’s competitor Verizon. Verizon has committed $100 million so it can provide ASTS technology to its users whenever they need it.

The deal helped add fuel to the rally, but even by the end of May, the stock was trading below its $10 opening price.

10x increase in bandwidth thanks to ASIC

ASTS is working on making an ASUS that will help increase the processing bandwidth per satellite 10 times.

This will provide the breakthrough that the company needs to scale its operations at a commercial level.

For the above purpose, the company has already completed the tape-out phase with TSMC. It will launch the ASICs on its Block 2 satellites. However, the first few Block 2 satellites may still use FPGAs, as the company has prioritized launching the satellites on time over using ASICs.

Switching from R&D to Manufacturing

As the company continues to fulfil its plans, it is also slowly switching away from an R&D focus to a manufacturing focus.

The first Block 2 satellites will be launched in the first quarter of 2025 and the company is already working on the production at its Texas manufacturing facility.

To help scale production, the company will also vertically integrate 95% of the subsystems that it builds in the future.

There is limited risk involved in this manufacturing project as the company only plans to launch a limited number of satellites for now.

Is ASTS a buy?

There is no doubt that the company is marching on achieving one milestone after another.

As with any investment, it is not how good the business is that matters. It is usually the price you pay for it that determines your returns in the long run.

ASTS stock has rallied over 800% in one year. There might well be more upside, but shrewd investors would like the dust to settle before beginning to take a position in the stock.