Near the end of 2020, AST SpaceMobile (NASDAQ:ASTS) blasted onto the Nasdaq Exchange through a business combination with New Providence Acquisition Corp. With that, people could invest in the “first and only space-based cellular broadband network accessible directly by standard mobile phones” through ASTS stock.
That’s right: it’s another special purpose acquisition company (SPAC) stock. SPAC mania has come and gone, so why should anybody be interested in AST SpaceMobile?
I’ll admit, ASTS stock isn’t for everyone. The company has a bold vision and its investors should have a certain level of risk tolerance.
Still, if you believe that everyone in the world should have broadband access – and that AST SpaceMobile has what it takes to turn this idea into a reality – then a moderately sized stock position could be warranted.
A Closer Look at ASTS Stock
Throughout 2020, New Providence Acquisition Corp. traded under the ticker symbol NPA and was priced at around $10.
That shell company’s business combination with AST SpaceMobile (or more accurately, with AST & Science, LLC) was approved on April 1.
However, NPA/ASTS stock already had its rocket ride and return to Earth by then. The big launch happened in late 2020, and culminated in a 52-week high of $25.37 on Feb. 9, 2021.
The approval of the business combination didn’t seem to help the investors, unfortunately. By June 18, the share price was $10 and change – not much higher than the pre-SPAC-deal-announcement price.
That’s not a bad thing, necessarily, for anyone who’s just discovering AST SpaceMobile now. Perhaps you’ll be able to get in at a favorable price point, and then hold on for another rocket ride (if it happens).
Eliminating the Gap
In a world that’s still dealing with the impact of the Covid-19 pandemic, sometimes it’s easy to forget about other important issues.
One of these issues would be the connectivity gap which, according to AST SpaceMobile, is being faced by today’s 5 billion mobile subscribers.
Thus, the company is seeking to eliminate that gap, while also providing broadband connectivity to “approximately half of the world’s population, who remain unconnected.”
That’s quite an ambitious set of objectives.
To achieve this, as InvestorPlace contributor Brenden Rearick explains, AST SpaceMobile is building a “one-of-a-kind, solely space-based broadband cell phone network” and thereby eliminate any 5G gaps worldwide, “making itself the most highly covered network in the world.”
Clearly, ASTS stock is an all-or-nothing type of investment. I can easily imagine this stock revisiting the $25 level if the company achieves its goals.
Indeed, AST SpaceMobile could become the first mover – the only mover, really – in building out a space-based mobile network. It’s exciting to consider.
A Veil of Secrecy
Now, I must concede that AST SpaceMobile is somewhat secretive in regard to its technology.
This, understandably, might bother some prospective investors. Curious minds should want to know exactly how AST SpaceMobile intends to build out a space-based mobile network.
The company has more than 1,000 patent and patent-pending claims. Personally, I would want to see at least some of them before making an investment in ASTS stock. Wouldn’t you?
No such luck. On the company’s frequently asked questions page, AST SpaceMobile states, “With over 1,000 patent claims, the technology is highly proprietary, and exactly how it works cannot be disclosed.”
That’s not the answer I was looking for. The company also teased us with this:
We can say that our engineers have designed an entirely new form factor and deployment method that we anticipate will significantly reduce the time and costs associated with manufacturing, launching and operating satellites.
I guess you could say that it requires a measure of faith to invest in AST SpaceMobile.
Whether you’re willing to take that chance, is entirely up to you.
The Bottom Line
AST SpaceMobile is ambitious, exciting and mysterious. It’s also a risky company to invest in.
Some folks won’t mind taking a leap of faith in what could be a first mover in space-based mobile technology.
At the very least, we can say that ASTS stock has already had a moon shot in 2021. Maybe there’s another rocket ride coming soon.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
