AST SpaceMobile, (NASDAQ: ASTS), pushed higher this morning to reach a new record of almost $120 after being selected as a primary contractor for the SHIELD Program.
“SHIELD”, part of a larger $151 billion defence framework, is designed to protect against threats such as cyber, missiles, and space. ASTS has now been given the opportunity to directly bid on future tasks.
This contract is a huge endorsement from the US Government for dual-use satellite technologies. There are still reasons to “sell” AST SpaceMobile’s stock on the 16th of January.
AST SpaceMobile Stock is Priced for Perfection
ASTS, with a current market capitalization of well over $40 billion is not a penny stock. It is priced like global success is a given.
According to barchart, the Nasdaq listed firm has lost 45 cents in each share during its last reported quarter. It is currently trading with a P/S multiple of almost 1,300x.
The intermittent phase is when the service only exists. As the second-gen BlueBird – Block 2 – satellites launch, AST SpaceMobile has only a few satellites orbiting.
ASTS’s stock is highly susceptible to a mean-reversion of 20% if even a small hiccup occurs in its roll-out of the next 20 satellites.
ASTS shares are at risk of massive dilution
AST SpaceMobile needs a lot of money to reach its goal of having “45-60” satellites for US coverage.
The company raised $1 billion in capital by selling convertible senior notes at a price of $96.30 per share.
AST SpaceMobile’s shares currently hover around $115, so those who hold the notes are “in money”.
The company will lose its existing shareholders and face significant pressure from institutions to sell the stock if they decide to convert the debt.
ASTS may be losing market share
SpaceX/Starlink is the logistics superiority. While AST SpaceMobile may have the better broadband technology (better spectrum, higher speeds), SpaceX/Starlink is the superior logistical machine.
As of writing, Starlink has already launched hundreds of direct-to-cell-enabled satellites. They’re live on T-Mobile, even if they only offer SMS and basic data.
Starlink, along with other competitors, is actively lobbying for the FCC’s limit on the power of ASTS massive phased-array antennas, citing possible interference.
The ASTS share price could be the winner of the technology war, but the loser in the war for market shares if Starlink saturates MNO markets with a service that is “good enough”, before ASTS has achieved continuous coverage.
Wall Street rates AST SpaceMobile as “Hold” at the moment, with a mean target price of around $80 indicating a potential “downside”, of over 30%.
The post 3 Reasons to Sell AST SpaceMobile Stock as It Soars On New SHIELD Contract may be updated as new developments unfold.
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