AST SpaceMobile launches first five commercial satellites, but stock slides

By James Rogers

AST SpaceMobile launched its first five commercial satellites, called BlueBirds, early Thursday

Space-based broadband company AST SpaceMobile Inc. launched its first five commercial satellites into space atop a SpaceX Falcon 9 rocket early Thursday.

The company's shares initially rose in premarket trading but are down 7.7% at 11:55 a.m. Eastern time, compared with the S&P 500's SPX gain of 0.1%. The stock is on pace for its biggest daily percentage decline since Sept. 6, when it fell 8.2%.

AST SpaceMobile shares climbed ahead of the launch, ending Wednesday's session up 6.9%. The stock also jumped last week after AST SpaceMobile targeted Sept. 12 for the launch of the satellites, known as BlueBirds.

Related: AST SpaceMobile's stock rises amid final preparations for its first commercial-satellite launch

The Falcon 9 lifted off from Space Launch Complex 40 at Cape Canaveral Space Force Station in Florida at 4:52 a.m. Eastern time. Just over an hour after launch, AST SpaceMobile (ASTS) confirmed that the first three satellites had been deployed, with the fourth and the fifth satellites deployed shortly afterwards. The company said the satellites' arrays will be unfolded over the coming weeks.

The satellites each feature the largest-ever commercial communications arrays to be deployed in low Earth orbit, according to the company.

The initial service, which is based on premium low-band spectrum, is planned to support beta test users for AT&T Inc. (T) and Verizon Communications Inc. (VZ) and will target approximately 100% nationwide coverage from space with over 5,600 coverage cells in the U.S., AST SpaceMobile said. In July, the company said that the Federal Communications Commission had granted an initial license for space-based operations in the United States.

Related: AST SpaceMobile shares slide on plan to sell up to $400 million of stock

The company's stock tumbled last week after AST SpaceMobile announced plans for an at-the-market sale of up to $400 million of common stock.

In May, AST SpaceMobile shares surged following the announcement of a deal with Verizon.

Brian Macauley, co-portfolio manager at the Hennessy Focus Fund, which has a position in AST SpaceMobile, told MarketWatch that the stock has a large retail following. "There are some passionate and very capable retail investors that have done excellent research on the business and published that research," he said. "I think the institutional investment world, which we're part of, has been slow to come around and understand this story."

He added: "This was a [special-purpose acquisition company], pre-revenue, with a large funding gap, with a small market cap. I think it's starting to attract more institutional investment."

AST SpaceMobile went public in 2021 through a merger with SPAC New Providence Acquisition Corp. Hennessey Focus Fund has held a position in AST SpaceMobile since the second quarter of 2021.

Coverage gaps have been a problem in the wireless industry since its origination, Macauley told MarketWatch. "Many companies have tried to solve this problem through space in the past and failed to do so in an economically viable way," he said. "They have failed to connect to unmodified handsets."

AST SpaceMobile shares are up 327.9% in 2024, outpacing the S&P 500's gain of 16.5%.

-James Rogers

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09-12-24 1210ET

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