AST SpaceMobile sends strong signal to SpaceX investors

If you’d invested $10,000 in SpaceX stock (SPCX) at its $135 June IPO price, it would have been worth about $10,600 at the Nov. 10 close.

It’s a modest gain for a company that’s hogged all the stock market headlines since its record-breaking debut, promising to reshape everything from rocket launches to mobile phones.

CEO Elon Musk, ever the optimist, has already been making some head-turning claims about what SpaceX’s financial ambitions could look like in the not-so-distant future.

“We do see a clear path to several hundred billion dollars a year in connectivity revenue,” Musk said during SpaceX’s October earnings call.

Now a smaller rival is quietly building a big business, and it could complicate that ambition.

AST SpaceMobile (ASTS) said it can begin intermittent satellite-to-phone service in the United States before 2026 ends, Android Headlines reported. It’s also preparing to deploy more than 100 satellites and eventually build its own rocket.

The twist for SpaceX shareholders is that AST is both a potential Starlink competitor and a customer paying SpaceX to get into orbit.

SpaceX’s next wireless competitor already depends on its rockets

AST’s Nov. 9 earnings report offered a clear challenge to SpaceX’s ambitions.

The up-and-coming space company is looking to offer satellite-based cellphone coverage that might rival Starlink, even as it relies on SpaceX rockets to launch its satellites.

The company expects initial, intermittent coverage in the United States and other markets before year-end, which means service will not yet be continuous nationwide coverage.

More SpaceX:

AST also reported $42.3 million in Q3 sales, while reaffirming its $150 million to $200 million full-year outlook. Those are early-stage figures compared with SpaceX, but they show AST is beginning to generate some serious sales while expanding its network.

The strategy relies on carrier relationships, including AT&T. AST describes a potential ecosystem of more than 60 mobile operators representing over three billion subscribers.

That said, SpaceX has a considerable head start. Starlink already offers satellite messaging through partners such as T-Mobile, and SpaceX is acquiring spectrum and developing terrestrial infrastructure in expanding its wireless ambitions.

Nevertheless, AST’s move shows SpaceX might not be alone in pursuing the next generation of cellphone coverage.

AST SpaceMobile plans satellite phone expansion while relying on SpaceX rocket launches.

GummyBone / Getty Images

AST’s satellite plan creates a second challenge for SpaceX

AST is looking to have approximately 45 BlueBird satellites in orbit by mid-2027 and more than 100 deployed in aggregate during 2027 and 2028, as reported by Yahoo Finance.

Crucially, these plans involve SpaceX, Blue Origin, and other launch providers, so it’s incorrect to perceive this as 100 SpaceX launches.

In addition, AST’s earnings underscore how intertwined the businesses remain. BlueBird satellites 14 through 16 have been delivered to Cape Canaveral and are awaiting confirmation of a SpaceX launch date. Three more are earmarked for a Blue Origin launch expected in early 2027.

But AST is now looking to control more of that journey.

Its proposed Blacklift rocket, designed to carry up to five BlueBird satellites per flight, is targeting initial launches in late 2028.

“It complements, it does not replace, our launch agreement with SpaceX, Blue Origin, and others for ’27 and ’28,” CEO Abel Avellan explained on the earnings call.

So interestingly, SpaceX can continue earning launch fees, even while AST competes with Starlink for wireless customers.

Building a reliable rocket, meanwhile, is expensive and technically challenging, and so far, AST hasn’t demonstrated a successful Blacklift flight.

SpaceX alone has spent more than $15 billion developing Starship, according to its IPO filings, while repeated test failures point to engineering risks, Reuters reported.

Still, if Blacklift works, AST could control more launch costs and scheduling. Over time, this could weaken one advantage SpaceX holds over emerging satellite operators.

SpaceX’s lofty valuation leaves little room for a wireless misstep

That said, there’s a tremendous difference in scale for both businesses.

SpaceX reported $14.6 billion in Q3 revenue, up 161% year over year, with its connectivity segment growing 69%. AST generated $42.3 million in the same quarter.

SpaceX was worth $1.94 trillion at its Nov. 10 close, or about 60 times its trailing $32 billion in sales. AST’s $13.1 billion valuation represented 92 times its $143 million in trailing revenue. Established carrier AT&T traded at only about 1.1 times sales.

SpaceX clearly enjoys a unique launch advantage. “Nobody else has that capacity to launch satellites in numbers and at the price that they can do,” said New York University valuation expert Aswath Damodaran, according to Investing.com.

For SpaceX investors, three tests now stand out.

Service launch: Can AST begin satellite cellphone coverage on schedule?
Customer growth: Can AST attract paying carriers and subscribers?
Rocket independence: Will Blacklift reduce AST’s reliance on SpaceX launches?

A successful AST rollout doesn’t automatically impact SpaceX’s much larger business. It could even generate additional launch revenue in the meantime.

But if satellite phone service becomes competitive sooner than expected, SpaceX might need to defend the wireless growth assumptions supporting its nearly $2 trillion valuation.