Late last year, a new and exciting special purpose acquisition company (SPAC) launched AST SpaceMobile (NASDAQ:ASTS) onto the Nasdaq Exchange. After a highly touted business combination with New Providence Acquisition Corp., ASTS stock was now available for the public to buy and sell.
With that, people could invest in the “first and only space-based cellular broadband network accessible directly by standard mobile phones.” Nearly a year later, AST SpaceMobile is still unique among tradable businesses in this highly specific niche.
The company’s concept is revolutionary: everyone in the world should have broadband access. Moreover, a low-latency, space-based connectivity platform can make this dream a reality.
But, can the company generate revenues from this concept? That’s the fundamental question that needs to be answered. So, strap in as we embark on a deep exploration mission into AST SpaceMobile.
A Closer Look at ASTS Stock
The most sensible strategy with ASTS stock, I believe, would be a buy-and-hold position. Trying to get rich quickly could lead to disaster.
Pre-merger, the stock traded under the ticker symbol NPA (representing New Providence Acquisition Corp.) 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.
If your timing was impeccable, you could have caught the rocket ride as NPA/ASTS took off from $10 in December 2020 to $25.37 in February 2021.
Was that rally a result of SPAC mania, or space-stock frenzy? Or, was it precipitated by Reddit short-squeeze traders?
Irrespective of what may have caused that run-up, it didn’t last long. The price chasers were severely punished as ASTS slumped to $7 in June.
The lesson here is to play the long game and plan for eventual returns, not immediate gains.
In any case, the stock recovered to $11 by the end of October. So, the worst might be over and a slow, sustainable recovery is hopefully in progress.
The Evolution of Connectivity
AST SpaceMobile’s investor presentation very effectively maps out the past, present and future of communications infrastructure.
The old-school equipment includes provider-specific mobile phones, which provide direct but limited connectivity.
Similarly, indirect connectivity via complex, expensive hardware only serves the needs of narrow customer segments.
With this methodology, provider-specific antennas mounted on planes, ships, vehicles and buildings can cost around $1,000 to $200,000 or even more.
AST SpaceMobile’s alternative is simple and efficient: direct broadband to mobile phones – and by that, I mean any standard mobile phone.
It’s a brilliant solution that serves the needs of the mass market, on a global scale.
Instead of having a dozen or more different service providers using different equipment, there’s just one provider: AST SpaceMobile.
Show Me the Money
Should we call it a monopoly, or the ultimate in connectivity and accessibility?
It all depends on one’s perspective, but personally, I like AST SpaceMobile’s bold vision.
Yet, informed investors will surely want to know whether the company is actually profitable or not.
So, let’s look at the most recently available data, which comes from AST SpaceMobile’s second-quarter 2021 business update.
As it turned out, AST SpaceMobile generated $2,773,000 in revenues, marking a huge improvement over the $402,000 generated in the year-earlier quarter.
Furthermore, the company reported a gross profit of $1,661,000. That’s certainly better than the gross loss of $370,000 observed during the second quarter of 2020.
AST SpaceMobile’s next quarterly update will probably be released in the near future, so investors should be on the lookout for that.
The Bottom Line
Trying to get rich quickly generally isn’t a recommended strategy, and this is particularly true with ASTS stock.
The good news is that AST SpaceMobile is exhibiting revenue growth.
Unfortunately, it might take a while for the market to fully appreciate AST SpaceMobile’s vision of universally accessible broadband connectivity.
So, just be patient if you’re holding the shares. Bold dreams can turn into a reality, and the profits should come even if they’re not quick or easy.
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.