On Thursday, B.Riley raised the stock price target on AST Spacemobile (NASDAQ:ASTS) to $26.00, a significant increase from the previous $15.00, while maintaining a "Buy" rating. This adjustment follows AST Spacemobile's second-quarter financial performance for 2024, which delivered results in line with expectations. The company reported revenues of $1 million and an EBITDA loss of $34 million, matching projections.
AST Spacemobile's capital expenditures for the quarter amounted to $22 million, surpassing the anticipated $28 million. Additionally, the company ended the quarter with a robust cash position of $288 million, far exceeding the expected $158 million.
The firm capitalized on its strong stock performance to raise $80 million through its at-the-market (ATM) offering and generated an additional $40 million in July, concluding the previous ATM program with ease. Now, with a substantial cash reserve and an available $51.5 million in additional liquidity from its senior secured facility, AST Spacemobile is moving forward with the planning and production of its next 17 Block 2 BlueBird satellites.
The company is preparing for the launch of its first five Block 1 BlueBird satellites, with the initial commercial service anticipated to follow a few months after. These satellites, which arrived at Cape Canaveral on August 8, are expected to deliver ten times the power of the current 100 MHz processing bandwidth demonstrated by BlueWalker 3. The launch window for these Block 1 satellites is set for early September.
The report also revisits the recent SpaceX Falcon 9 rocket incident, which had potentially delayed AST's service timeline. On July 11, a second-stage anomaly led to the loss of 20 SpaceX Starlink satellites. However, SpaceX quickly regained FAA approval to resume launches on July 26, successfully completing a launch the following day.
B.Riley maintains its full-year 2024 revenue and EBITDA estimates for AST Spacemobile at $5 million and a loss of $137 million, respectively, noting that there could be potential upside if the initial Block 1 satellites begin service before the year's end. The firm has also adjusted its fiscal year 2025 estimates slightly from $130 million in revenue and a $33 million EBITDA loss to the same revenue with a slightly larger EBITDA loss of $37 million.
The new price target of $26 reflects B.Riley's confidence in AST Spacemobile's position as a frontrunner in the direct-to-device (D2D) broadband connectivity market. The firm's valuation anticipates nearly an $8 billion enterprise value at the end of fiscal year 2025, assuming convertible notes are exercised into common shares.
In other recent news, AST SpaceMobile, the firm working to develop a global cellular broadband network in space, has provided an update on its Q2 2024 progress. The company has completed the assembly of its first five commercial satellites, which are set to be launched in September. These satellites are expected to provide nationwide coverage in the United States. In addition, AST SpaceMobile has secured partnerships with major companies including Verizon (NYSE:VZ), AT&T, and Google (NASDAQ:GOOGL).
The company's financial status appears to be robust, with non-GAAP adjusted cash operating expenses for Q2 reported at $34.6 million and a cash reserve of $287.6 million at the end of the quarter. AST SpaceMobile is now focusing on the production and deployment of Block 2 satellites, with the initial launch scheduled for Q1 2025.
The firm has stated that it does not plan any public equity offerings through the end of 2024. These recent developments underscore AST SpaceMobile's strategic approach to growth and financial management.
InvestingPro Insights
Following B.Riley's updated outlook on AST Spacemobile, it's valuable to consider some key metrics and InvestingPro Tips that could further inform investors. AST Spacemobile has been recognized for holding more cash than debt on its balance sheet, which aligns with their reported strong cash position of $288 million.
This financial stability is a critical factor for the company as it advances with the production of its Block 2 BlueBird satellites. Moreover, the stock has demonstrated significant price volatility, which is a trait investors may wish to monitor, especially considering the high price uptick over the last six months.
From a valuation perspective, AST Spacemobile is trading at a high Price / Book multiple of 34.06, suggesting a premium market valuation relative to its book value. Despite the company's revenue decline in the last twelve months, with a decrease of 95.63%, the market cap stands at a substantial $5.6 billion USD.
This valuation reflects investor optimism about the company's future growth prospects, especially with the upcoming launch of its Block 1 BlueBird satellites. Furthermore, the company's stock has seen a strong return over the last year, which could be indicative of market confidence in their long-term strategy.
Investors looking for additional insights can find an array of InvestingPro Tips on AST Spacemobile, with 15 more tips available that delve into various aspects of the company's financial health and market performance. These tips, accessible through InvestingPro, offer a more granular view of the company's financial situation and future outlook, which could be particularly useful for those considering an investment in AST Spacemobile.
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