AST SpaceMobile Stock Is Down 50% From Highs, and Just Raised $1 Billion to Shore Up Its Satellite Internet Plans. Here's Why I Am Still Not Buying Shares.

AST SpaceMobile recently raised $1 billion through a convertible bond offering as its stock price sits about 50% below its recent peak. While the company aims to provide direct-to-smartphone satellite internet, the path to profitability remains difficult. The business continues to burn significant cash, reporting negative $1.37 billion in free cash flow over the last year.

Manufacturing and launch operations present ongoing hurdles. The company requires more than 90 additional satellites in low Earth orbit to complete its constellation. Past performance shows that launch delays and technical setbacks are frequent in this sector. A recent mission involving a Blue Origin rocket resulted in a lost satellite, and recent launchpad explosions highlight the supply constraints facing the industry.

Competition looms large as well. SpaceX remains a primary launch partner while simultaneously developing its own direct-to-device internet capabilities. Given that SpaceX possesses vertical integration and massive capital, the competitive pressure on AST SpaceMobile will likely intensify.

Financial metrics also suggest caution. With a market value around $21 billion and minimal annual revenue, the current share price assumes years of perfect execution. The ongoing reliance on debt and the potential for further shareholder dilution create additional risks for investors. Despite the recent price drop, the valuation remains disconnected from current revenue generation, making the stock a difficult case for new investors.