Shares of space economy specialist AST SpaceMobile (NASDAQ:ASTS) — which builds the first and only space-based cellular broadband network directly accessible by standard mobile phones — provided a business update for the second quarter. In particular, a $179 million financing agreement should help bolster strategic investments, subsequently lifting sentiment for ASTS stock.
According to its press release, AST announced the completion of a comprehensive financing package that will provide up to $179 million of cash and liquidity. Per the company’s Chief Financial Officer Sean Wallace, this deal is comprised of an up to $100 million senior secured credit facility and a $15 million equipment-backed loan completed on Aug. 14, the date of the release.
In addition, the package encompasses a previously announced $57 million common stock offering in June 2023, as well as $7 million raised under the at-the-market (ATM) program during Q2 of this year. Notably, the release emphasizes that the financing agreement consists of non-dilutive debt and equity designed to support strategic investment processes.
On a technical note, AST declared that it made history with its space-based 4G LTE cellular broadband capabilities confirmed to everyday smartphones, reaching speeds above 10 megabits per second (Mbps).
ASTS Stock Intrigues But Challenges Remain
Fundamentally, ASTS stock continues to attract speculators in large part because of the underlying space economy. As a McKinsey & Company report pointed out, the industry has grown to a valuation of $447 billion recently. Further, it could hit $1 trillion by 2030. At the same time, AST has struggled mightily in the price chart since its public market debut.
On the positive front, the broadband specialist mentioned that its Block 1 BlueBird program involving the satellites undergirding the aforementioned cellphone-compatible broadband constellation is fully funded. Further, manufacturing is underway and ramping up ahead of the planned launch in Q1 2024 of the first of its five commercial satellites.
That’s a significant disclosure as Block 1 has previously been pushed behind schedule because of supply chain issues.
Nevertheless, ASTS stock continues to struggle in the market because of longer-term credibility concerns. While AST is planning to launch five commercial satellites, management previously disclosed that it needs 110 BlueBirds in low earth orbit (LEO) to reach substantial global mobile coverage, according to SpaceNews.
However, that’s quite a challenge, which explains the near-66% loss in ASTS stock over the trailing one-year period.
Why It Matters
Within the past month, Barclays’ analysts have pegged ASTS stock as a buy. They gave the stock a price target of $15, implying about 245% upside potential. Within a one-year period, a total of three analysts have covered AST, all of them rating shares a buy.
On the date of publication, Josh Enomoto 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.
