Why AST SpaceMobile Stock Popped on Monday

AST SpaceMobile (ASTS 1.97%) stock is on the move again Monday. Today’s gain is about 2.3% as of 12:20 p.m., although the stock’s bopping around quite a bit, and if you blink, it might just as easily go down as up.

Credit for today’s turbulence goes to Scotiabank analyst Andres Graham, who this morning lifted his price target on AST stock from $28 to $45.90 — a very precise valuation on a stock that isn’t particularly easy to value (because it has no profits).

What Scotiabank likes about AST SpaceMobile stock

Graham denies his new price target is tied to any “short-term trading opportunity” in AST. He takes the long view, arguing AST has a superior satellite technology that could one day make it “the world’s largest wireless company by subscribers.

(If that prediction sounds familiar, it should. Back when AST was hyping its IPO, the company boasted it was targeting “five billion mobile subscribers” in a “$1 trillion global mobile wireless services market.”)

According to Graham, AST’s technology is so good, with an estimated peak data rate of up to 120 megabits per second per satellite, it’s even better than SpaceX’s Starlink.

Is AST stock a buy?

Graham says AST’s faster data transmission speeds (which Starlink would probably dispute) and greater beam precision mean SpaceX may have to completely redesign its satellites to compete. That could prove quite tricky, as SpaceX has more than 6,200 Starlink satellites up in orbit already. 

What’s probably getting investors even more excited today, though, is Graham’s suggestion that SpaceX might decide to just buy AST SpaceMobile outright. With AST stock currently fetching $9 billion and SpaceX valued well over $200 billion, that’s not entirely out of the question. SpaceX could easily afford to buy AST.

I wouldn’t bet on it happening, though. After all, Starlink is profitable and AST is not. I’d much rather own a piece of a profitable Starlink IPO than unprofitable AST stock.