AST SpaceMobile, Inc. (ASTS): A Bull Case Theory

We came across a bullish thesis on AST SpaceMobile, Inc. (ASTS) on Substack by Antonio Linares. In this article, we will summarize the bulls’ thesis on ASTS. AST SpaceMobile, Inc. (ASTS)’s share was trading at $28.55 as of March 25^th.

AST SpaceMobile is on the verge of revolutionizing telecommunications by creating a satellite network capable of delivering direct-to-cellphone broadband connectivity from space. Unlike competitors such as Starlink, AST’s technology eliminates the need for specialized satellite phones, making it a game-changer in mobile connectivity. No other company is close to achieving this, and while SpaceX has the resources, AST’s unique technological stack creates a formidable moat. The company has already deployed five fully functional Block 1 satellites and holds Memorandums of Understanding (MOUs) covering a staggering 3 billion people. Once AST reaches a critical mass of 45-60 satellites, it will be positioned to scale rapidly to hundreds of millions of customers, potentially generating billions in free cash flow almost overnight.

AST is not only pushing the boundaries of satellite technology but also excelling in regulatory navigation and telecom partnerships. Its Block 1 satellites, as described by CEO Abel Avellan, are the largest ever deployed in low Earth orbit, except for the International Space Station. The upcoming Block 2 satellites will be more than three times the size of Block 1, further enhancing AST’s capabilities. The company’s proprietary beam-forming technology allows it to overcome the fundamental challenge of satellite communications: sending strong, unmodified signals to numerous devices simultaneously. Unlike traditional satellites that must choose between broadcasting weak signals to many or strong signals to a few, AST’s phased array antennas can precisely direct signals, ensuring seamless connectivity. This breakthrough, coupled with AST’s portfolio of 3,500 patents, highlights the difficulty of replicating its technology.

Beyond its technological edge, AST’s ability to execute across multiple fronts is a testament to its process power. The company has rapidly advanced from securing initial agreements to executing definitive partnerships with telecom giants like AT&T and Verizon. AT&T, which initially signed an MOU, later invested directly in AST and formalized a definitive agreement in Q3 2024. AST is now integrating with AT&T’s network, with Verizon expected to follow suit. This rapid execution underscores AST’s organizational efficiency, allowing it to convert technical advancements into commercial agreements at an exceptional pace. The U.S. Space Development Agency (SDA) has also recognized AST’s potential, selecting it as a prime contractor in Q3 2024 and awarding a $43 million contract for a non-communications service in Q4 2024. The SDA’s interest in AST beyond broadband services speaks to the versatility and broader applicability of its satellite platform.

AST’s competitive advantage extends beyond technology and partnerships—it is also deeply vertically integrated, which enhances control and cost efficiency. As of Q4 2024, the company is 95% vertically integrated, with its satellites being vehicle-agnostic, allowing them to launch on any rocket. While the BlueWalker3 satellite required significant manual operation, the newly launched Block 1 satellites are fully autonomous, and the upcoming Block 2 satellites will inherit these advanced capabilities. AST has even developed its own application-specific integrated circuits (ASICs) to replace third-party components, a move reminiscent of Tesla’s early focus on in-house innovation to drive superior performance. This relentless pursuit of vertical integration positions AST to scale efficiently while maintaining technological leadership.

The potential financial implications of AST’s success are staggering. The company is currently pre-revenue, but its ability to onboard customers seamlessly via standard cellular frequencies means that, once operational, it could capture a significant portion of the 2.6 billion people currently without internet access. Moreover, AST’s technology is not limited to smartphones—it can be extended to power IoT devices and networks, further expanding its addressable market. The key inflection point will be the deployment of 45-60 satellites, after which AST’s free cash flow could surge from negative to billions within a short timeframe. The business model is highly scalable, with each new satellite adding incremental revenue at minimal additional cost.

AST’s rapid technological advancements, regulatory milestones, and partnerships with industry leaders point to an imminent breakthrough in space-based telecommunications. Its ability to deliver broadband directly to unmodified smartphones represents an unprecedented leap in connectivity, one that has the potential to generate massive free cash flow in a short period. With strong backing from major telecom players, a vertically integrated supply chain, and proprietary technology that is nearly impossible to replicate, AST is poised to redefine mobile internet access on a global scale. Investors who recognize the significance of AST’s achievements before it reaches operational scale may be looking at one of the most compelling investment opportunities in the space industry today.

AST SpaceMobile, Inc. (ASTS) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 22 hedge fund portfolios held ASTS at the end of the fourth quarter which was 18 in the previous quarter. While we acknowledge the risk and potential of ASTS as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than ASTS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.