A report from Reviews.org found that 74% of Americans were “uneasy leaving their mobile phones at home.”
This speaks to how attached we’ve become to our smartphones.
And that’s thanks in part to how easy it is to access information from all but the most remote locations in the U.S.
While mobile and internet connectivity is strong in the U.S., one-third of the world’s population still can’t get online.
Most of the underserved population reside in Asia and Africa due to poor infrastructure for things like cell towers and fiber-optic cables.
Companies are turning to outer space as a means to provide cell and internet access to all.
But not every company is finding success among the stars.
This is the case with AST SpaceMobile Inc. (Nasdaq: ASTS).
ASTS Faces Major Competitions … and It’s Losing
AST SpaceMobile develops low-orbit satellites to deliver cell and internet access to underserved areas of the world.
It competes with companies like Elon Musk-backed SpaceX and its Starlink service.
The problem is that Starlink is so far ahead of the pack. It’s very hard — and expensive — to keep up.
As of December 2022, Starlink had more than 3,500 of its satellites in space, with approval from the FCC to launch up to 7,500 of its Gen 2 satellites in the future.
AST SpaceMobile only launched its BlueWalker 3 test satellite last year.
And it’s created a stock that’s not worth investing in right now.
ASTS stock scores a “High-Risk” 3 out of 100 on our Stock Power Ratings system. We expect it to underperform the broader market over the next 12 months.
SpaceMobile Stock: Horrible Growth + Weak Momentum
Looking at AST SpaceMobile’s financials tells the story of a tech company that is spending WAY more than it’s bringing in:
- Its operating expenses for its most recent quarter were $38.6 million — that’s an 84% increase from the same quarter a year ago!
- But the company’s revenue for the same quarter was just $4.2 million — showing a massive $32 million quarterly loss.
While ASTS scores in the green on our size factor (77), you can see why it slumps on growth (3).
Its value is also in the red (17) with a negative price-to-earnings ratio and price-to-sales that are nearly eight times higher than the industry average.
This company is spending more than it makes and investors are nervous … especially if this is a long-standing trend. Remember, we’re in a high interest rate environment where it’s becoming more expensive every day to borrow money and fund projects.
Another telltale sign to avoid ASTS is its lack of recent momentum … AST SpaceMobile stock fell 53.4% off its 52-week high set in August 2022:
ASTS took off like a satellite being launched into space last summer. The share price increased 129.9% from July 2022 to August 2022.
Since reaching that 52-week high, the stock has plummeted 53.4% and is trading below its price 12 months ago.
ASTS stock scores a terrible 3 overall on our proprietary Stock Power Ratings system.
That means we consider it “High-Risk” and expect it to underperform the broader market.
Bottom line: With over one-third of the world’s population still underserved by internet and mobile connections, there is a big market out there for the taking.
But companies need a lot of resources to compete with the names that have already established a strong foothold in the industry.
ASTS is struggling to make any end-roads in providing the internet to those unable to get an internet connection.
That’s why SpaceMobile stock is one to stay away from in 2023.
Stay Tuned: Growth and Value in Oil Transportation
Tomorrow, we’re returning to our original Stock Power Daily form.
I’ll share all the details on a logistics company that has mastered efficient oil transportation, and that’s paying off for its investors.
Matt Clark, CMSA®
Research Analyst, Money & Markets
P.S. I’d love to hear what you thought about my “Stock to Avoid” article today. Was it valuable? Would you like us to continue sharing high-risk stocks on occasion, so you know what to stay away from?
Would you prefer that we only share “Bullish” and “Strong Bullish” stocks?