Stocks of a satellite communication corporation AST SpaceMobile is the name of a company that focuses on providing mobile connectivity services from space. ( ASTS -1.05% ) Increased by 15% by 10 a.m. ET on Friday morning following another upgrade from a Wall Street analyst. price target However, the stock reversed its direction and dropped by 8.5% by 11 a.m.
The question arises: what caused the rise and fall? TheFly.com reported that Scotiabank analyst Andres Coello increased his price target for AST to $28. This may seem positive, as Coello predicts that the stock will perform well. However, the issue is that AST’s current share price is $35, making this update somewhat negative.
AST has acquired momentum in the field of space.
AST announced on Wednesday its intentions to introduce five Bluebird models. satellites used for communication purposes during the first two weeks of September.
There are limitations to consider. Having five satellites is not sufficient. AST requires 20 satellites to ensure coverage across the entire United States. 168 satellites The initial five units will have the capacity to conduct beta tests with a maximum of 5,600 calls simultaneously. Although the phone calls can be made across the country, there may be areas where coverage is not available, resulting in dead zones.
AST is in the process of constructing an additional 17 satellites to enhance its capabilities, which will be launched at a later date.
Should I invest in AST stock?
In order to cover the costs, AST is generating funds by raising cash, resulting in a current balance of $287.6 million. up $75 million The rate at which the cash is being spent concerns me, based on the latest report.
In the company’s latest 10Q report, it disclosed a negative operating cash flow of $64.3 million for the current year, along with $61.8 million in capital expenditures. Cash flow that is in the negative or deficit. A recent report revealed that the company has spent around $347.5 million on property and equipment costs in the first half of the year, indicating a higher cash depletion rate than the previously reported $126.1 million.
At the same time, the company anticipates that constructing the entire fleet of 168 communication satellites will still amount to $5 billion. money that it does not currently have It is difficult to recommend buying AST’s stock until we have a clearer understanding of how they will finance all of this.
