We recently published a list of 10 Stocks That Will Go to the Moon According to Reddit. In this article, we are going to take a look at where AST SpaceMobile, Inc. (NASDAQ:ASTS) stands against the other stocks.
FINRA Investor Education Foundation and CFA Institute (2023) revealed that ~37% of Gen-Z investors in the US and ~38% in the UK come to social media influencers regarding investment decisions. Therefore, it is important to explore the role finfluencers (influencers sharing financial advice on social media) play in providing investment information and how Gen-Z investors engage with finfluencers. Young investors are considering memes and viral videos as the primary source of investment advice.
Social Media and Investments: Do They Complement Each Other?
Experts believe that retail or non-professional investors are now becoming dependent on digital channels, like social media platforms such as TikTok, when it comes to investing.
FINRA revealed that ~60% of US investors under age 35 believe that social media can be used as a source of investment information. This compares to ~57% who use finance professionals. This increase is probably because digital channels are becoming easily accessible, with ~60% of the global population utilizing social media (as per DataReportal).
Quick-scroll websites are now considered the go-to spot for investment ideas and inspiration. This is because of their bite-sized format and easy access. Ofcom, which tracks news consumption in the UK – revealed that TikTok’s reach for news went up from ~1% in 2020 to ~7% in 2022. This was mainly seen in younger folks aged between 16 – 24 years. Pew Research mentioned that, in the US, this increased from ~3% in 2020 to ~10% in 2022.
Financial advice content, which is shared on social media, has been contributing to the growth of the “creator economy,” which is pegged at ~$127 billion globally (as per Coherent Market Insights). This is expected to reach US$528.39 billion by 2030, with growth stemming from higher demand for user-generated content and increased monetization opportunities. Financial institutions and investment advisory companies are now focusing on creating pathways from social media to their product and services to exploit strong market opportunities. Therefore, most retail investors continue to make investing decisions under social media’s influence.
Retail Traders Making a Significant Portion in The US Stock Options
JPMorgan Chase & Co. highlighted that non-professional investors are now making a bigger part of the US options market as they continue to pour money mainly into short-term bets and technology stocks. The bank highlighted that retail traders accounted for ~18.3% of the total options activity in June. Social media and online investing communities have influenced retail investors to the extent that these investors don’t shy away from making investments in the downturn.
In late July and early August 2024, when there was a sharp decline in popular technology shares, retail investors turned out to be net buyers.
Vanda Research mentioned that individual investors, who were caught up in the market downturn, continued to be net buyers of shares of leading technology and AI-related companies. Just to balance out the risks, retail investors directed significant buying to an ETF tracking 20-Y Treasury bonds. Wall Street experts and enthusiasts believe that this confidence comes from the online investing communities and social media platforms, where there were discussions about going long on leading technology shares as they were trading at “decent levels.”
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
An aerial view of a communications satellite in orbit, beaming its signal down to Earth.
AST SpaceMobile, Inc. (NASDAQ:ASTS)
Number of hedge fund holders: 15
AST SpaceMobile, Inc. (NASDAQ:ASTS) is a satellite designer and manufacturer. The company is focusing on building a global cellular broadband network in space to operate directly with standard, unmodified mobile devices based on extensive IP and patent portfolio.
AST SpaceMobile, Inc. (NASDAQ:ASTS)’s scalability and advantageous cost position are expected to act as tailwinds over the medium term. Their satellite constellation’s design enables scalability regarding coverage area and number of users served. This allows them to grow as and when demand increases. By using existing mobile infrastructure and focusing on improving connectivity in areas that are underrepresented in network coverage, AST SpaceMobile, Inc. (NASDAQ:ASTS) can potentially provide cost-effective solutions compared to building new infrastructure from scratch. Also, vertical integration of 95% of satellite subsystems provides the company control over IP and manufacturing.
AST SpaceMobile, Inc. (NASDAQ:ASTS) is also expected to benefit from the recent announcement of a strategic partnership with Verizon Communications Inc. (NYSE:VZ). Apart from securing additional capital through prepayments and convertible notes, this partnership should accelerate AST SpaceMobile, Inc. (NASDAQ:ASTS)’s mission to eliminate connectivity gaps throughout the US. The company now seems to be strategically positioned to achieve the strong feat as it targets 100% geographical coverage throughout the continental U.S., which is the most valuable wireless market globally.
The company continues to work on the production and deployment of Block 2 satellites, with adjusted cash operating expenses to remain in the range of $30 million and $35 million per quarter for the rest of the year.
Scotiabank upped their target price on shares of AST SpaceMobile, Inc. (NASDAQ:ASTS) from $28.00 to $45.90, giving it a “Sector outperform” rating on 26th August.
Overall ASTS ranks 9th on our list of stocks that will go to the moon. While we acknowledge the potential of ASTS as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued 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.
READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’
Disclosure: None. This article is originally published at Insider Monkey.
