AST SpaceMobile stocks underperform in the market. Over the past year, the S&P 500 has risen 29.91%, while ASTS has risen 19.43%. AST SpaceMobile stocks are also more volatile than 75% of other US companies. Considering how expensive AST shares are, a continued downward spiral would make the shares worth next to nothing in a short time. What are the reasons for comparatively poor performance, and is there any hope for AST SpaceMobile?
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A High-Risk Space Venture
Launching satellites into space carries a lot of risk for all space ventures, but AST comes with its own set of unique risks. As ambitious as AST might be, it lacks prior experience with large satellites, which more than doubles the risk of failure. There are increasingly large volumes of debris entering the orbit, most of it man-made. Defunct satellites and a momentary loss in transmission can be all it takes to cause a collision.
On the other hand, the size of the satellites drastically increases the risk of collision with other satellites and with other floating debris. AST is still fledgling when it comes to being able to handle heavy and complicated machinery and vehicles, so any interruption in transmission or any slight hiccup can end up spelling disaster. NASA’s stringent rules for safety also mean that AST has to step up its game, which may prove to be a challenge.
AST requesting the FCC to control the constellation at the ambitious altitude of 720km above sea level has also raised concerns. The large scale of the project had already caused some level of uncertainty from NASA and Tech Freedom. AST has already taken strides to announce its approval from the Senate and its intention to abide by NASA’s safety regulations. It’s only a matter of time before we can see the results from this endeavor and measure its success or failure.
Where Do These Risks Stem From?
Currently, AST only has one satellite made by NanoAvionics, the BlueWalker 1. The BlueWalker 1 was an early project, and it played a vital role in shaping the company’s focus.
NanoAvionics has very little experience when it comes to constructing gigantic satellites, which means that it will have very little to do with AST’s plans for the future. NanoAvionics is also at a notable disadvantage in valuable partnerships that can help pave the way for AST’s goals.
It seems that Abel Avellan, Chairman and CEO of AST SpaceMobile and NanoAvionics, rush around focusing resources on nanosats and on supersized satellites. The huge gap and difference between the projects make it difficult to focus on both simultaneously. More likely, the company knows that AST’s technology is immature and raising questions, so NanoAvionics’s CubeSat is the so-called plan B for the company. Otherwise, they would have sold NanoAvionics and focused entirely on AST SpaceMobile.
Another notable problem for AST is that it went public as a SPAC instead of an IPO. It is a problem because it puts the strength of the technology under scrutiny.
Companies that usually go public as SPAC typically try to get funding and investors through popularity, not through the efficiency of the technology. So it seems like AST does know that its long-term plan and technology might crumble if put to the test. As a result, some investors will lose confidence in AST and shy away.
The future of AST looks bleak, and it doesn’t inspire confidence in onlookers and investors. AST’s lack of experience and the decision to go public as a SPAC have labeled it as a wild card. It would have been more prudent for AST to gain experience with smaller satellites and refine their technology before venturing into launching enormous satellites.
All space exploration has risks attached to it, but AST comes with a lot more other risks that competitors may not have. AST has to find a foolproof way to turn its fortunes around. Building valuable partnerships will come in handy in the future. At the end of it all, achieving all the set goals will be a herculean task for AST.